Transportation Programming Process*

TRANSPORTATION

PROGRAMMING

PROCESS

SPECIAL REPORT 157 • TRANSPORTATION RESEARCH BOARD • NATIONAL RESEARCH COUNCIL 1975 TRANSPORTATION RESEARCH BOARD

Officers Milton Pikarsk, Chairman Harold L. Michael, Vice Chairman W. N. Carey, Jr., Executive Director

Executive Committee Harvey Brooks Robert N. Hunter Chairman, Commission on Sociotechnical Chief Engineer, Missouri State Highway Systems, National Research Council (ex officio) Commission Asaph H. Hall Scheffer Lang Federal Railroad Administrator (ex officio) Assistant to the President, Association of Frank C. Herringer American Railroads Urban Mass Transportation Administrator Benjamin Lax (ex officio) Director, Francis Bitter National Magnet Henrik E. Stafseth Labbratory, Massachusetts Institute of Executive Director, American. Association of Technology State Highway and Transportation Officials Daniel McFadden (ex officio) Department of Economics, University of Norbert T. Tiemann California, Berkeley Federal Highway Administrator (ex officio) Harold L. Michael William L. Garrison School of Civil Engineering, Director, Institute of Transportation and Purdue University Traffic Engineering, University of California. D. Grant Mickle Berkeley (ex officio, Past Chairman, 1973) Highway Users Federation for Safety and Jay W. Brown Mobility Director of Road .Operations, Florida James A. Moe Department of Transportation Executive Engineer, Hydro and Community (ex officio, Past Chairman, 1974) Facilities Division, Bechtel, Inc. George H. Andrews Milton Pikarsky Director, Washington Department of High ways Chairman and Chief Executive Officer, Kurt W. Bauer Regional Transit Authority, Chicago Executive Director, Southeastern Wisconsin J. Phillip Richley Regional Planning Commission Vice President— Transportation, Dalton, Manuel Carballo Dalton, Little and Newport Deputy Commissioner, New Jersey Department Raymond T; Schuler of Transportation Commissioner; New York State Department L. S. Crane of Transportation Executive Vice Presiden t— Operations, William K. Smith Southern Railway System Vice President, General Mills, Inc. James M. Davey R. Stokes Consultant, Manchester, Michigan Executive Director, American Public Louis J. Gambaccini. Transit Association Vice President and General Manager, Percy A. Wood Poet Authority Trans-Hudson Corporation Executive Vice President and Chief Operating Alfred Hedefine Officer, United Air Lines Senior Vice President, Parsons, Brincker/zoff, Quade and Douglas, Inc. TRANSPORTATION PROGRAMMING PROCESS*

Proceedings of a conference held March 23-26, 1975, at Orlando, Florida

SPECIAL REPORT 157 TRANSPORTATION RESEARCH BOARD, NATIONAL RESEARCH COUNCIL, WASHINGTON, D.C. 1975 Transportation Research Board Special Report 157 The conference that is the subject of this report Price $3.40 was approved by the Governing Board of the National Edited for TRB by Mildred Clark Research Council acting in behalf of the National Academy of Sciences. Such approval reflects the Governing Board's judgment that the conference is of subject areas national importance and appropriate with respect to 11 transportation administration both the purposes and resources of the National Re- 14 transportation finance search Council. 15 transportation economics The members of the c9mmittee selected to organize 81 urban transportation administration the conference and to supervise the preparation of this report were chosen for recognized scholarly competence and with due consideration for the balance of disciplines appropriate to the project. Responsibility for the selection of the participants in the conference and for any summaries or recommendations in this report rests with that committee. The views expressed in individual papers and attributed to the authors of those papers are those of the authors and do not necessarily reflect the view of the committee, the Transportation Research Board, the National Transportation Research Board publications are Academy of Sciences, or the sponsors of the project. available by ordering directly from the Board. They Each report issuing from such a conference of the are also obtainable on a regular basis through organiza- National Research Council is reviewed by an indepen- tional or individual supporting membership in the dent group of qualified individuals according to pro- Board; members or library subscribers are eligible for cedures established and monitored by the Report Re- substantial discounts. For further information, write view Committee of the National Academy of Sciences. to the Transportation Research Board, National Academy Distribution of the report is approved by the President of Sciences, 2101 Constitution Avenue, N.W., Washing- of the Academy upon satisfactory completion of the ton, D.C. 20418. review process.

LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA National Research Council. Transportation Research Board. Transportation programming process. (Special report—Transportation Research Board; 157) 1. Transportation planning—United States—Congresses. 2. Transportation and state—United States— Congresses. I. Series: National Research Council. Transportation Research Board. Special report— Transportation Research Board; 157. HE19317 380.5'0973 75-23491 ISBN 0.309-02391-2 Contents

INTRODUCTION 1 DISCUSSION Robert W. Nelson 40 SUMMARY OF CONFERENCE W. M. Hilliard 41 Steering Committee 2 PRICING AND INVESTMENT SUMMARY OF WORKSHOPS 6 IN TRANSPORTATION FACILITIES PROGRAMMING IN George W. Hilton 45 PERSPECTIVE James R. Nelson 14 PROGRAM DEVELOPMENT J. Robert Harbison 51 FEDERAL ROLE IN DISCUSSION PROGRAMMING Thomas F. Humphrey 53 Theodore C. Lutz 25 Thomas P. Messier 56

STATE ROLE IN DECISION MAKING PROGRAMMING Alan Altshuler 59 Harry R. Hughes 28 DISCUSSION Norman H. Emerson 65 LOCAL ROLE IN PROGRAMMING EVALUATION Milton Pikarsky 31 Walter L. Revell 67 DISCUSSION RESOURCE AND FINANCIAL Lester P. Lamm 69 MANAGEMENT: SOME C. Kenneth Or.ski 70 PERSISTENT AND PERPLEXING PROGRAMMING PROBLEMS PARTICIPANTh AND Raymond T. Schuler 34 SPONSORING COMMITTEE 73 Introduction

The transportation programming process includes those activities that are required to finance, select, and schedule projects that have been identified through the planning function of federal, state, and local agencies. Programming includes funding considerations such as allocation of funds among major programs, among states and local areas, among modes of transportation, and among projects. Within this framework of funding constraints, goals, objectives, and selection criteria for proposed transportation facilities are developed. Since recent legislation introduced a wide variety of special considerations that must be incorporated into practice in each state and urban area, the form of federal participation in transportation financing is undergoing substantial change at all levels in the programming process. Traditionally, programming has been accomplished independently for each mode of transportation, and the processes in use have varied significantly among modes. Inter- modal planning has received greater emphasis since the U.S. Department of Transporta- tion and numerous state departments of transportation were created. This emphasis has challenged conventional programming techniques to be responsive to new requirements resulting from a broader, more comprehensive approach to transportation planning. Recognizing the need for the exchange of ideas and experiences among individuals who have primary responsibility in the area of programming, the Office of the Secretary of the U.S. Department of Transportation, the Federal Highway Administration, the Urban Mass Transportation Administration, and the Federal Aviation Administration asked the Transportation Research Board to prepare a report on multimodal transportation programming. To accomplish this task, the Transportation Research Board invited a small group of participants to a conference in Orlando, Florida, March 23-2 6, 1975, to address a set of questions related to programming. The conference format consisted of the presentation of formal papers, prepared discussions, and workshop sessions. This report includes the steering committee summary, the summary of the workshops, and the formal papers presented at the conference. Summary of Conf erence

Steering Committee Throughout the Conference on the Transportation Programming Process, a number of issues kept emerging both in the workshops and in the formal presentations. These key issues are discussed in this summary report. The issues can be divided into 6 areas:

Programming should be based on goals and objectives and not on fund structures; Governmental roles in programming should be clearly delineated; Programming should continue to emphasize the trend toward decentralization of decision making to the lowest feasible level of government; Fiscal philosophy for transportation programs is moving away from modal trust funding and categorical grants; Diverseness and disparateness are characteristics of the present time (common agreement on needed transportation systems no longer exists); and There should be a continuum in the planning, programming, and project-selection processes.

PROGRAMMING BASED ON GOALS, NOT AVAILABLE FUNDS

The conferees emphasized that program definition should be based on transportation goals and objectives and not on availability of categorical allocations of funds from higher governmental levels. Program needs should be first defined, and then sources should be found to meet those needs. To fund all programs may be impossible, and this procedure clearly depicts the effects on the transportation programs of funding levels by setting forth a hierarchy of programs based on funding priority. Both capital and operating programs must be considered together in developing transportation programs. If revenues are scarce priority should be given to the maintenance and operation of existing systems rather than to the capitalization of new systems. The conferees suggested that, in times of revenue shortages, increasing taxes and fares might be better than reducing levels of, service. Funds should be raised at the lowest appropriate level of government. If higher levels of government assess taxes for reapportionment because of efficiency or political considerations, the revenue allocations to lower levels of government should be without restriction.

GOVERNMENT ROLES IN PROGRAMMING

The conferees recognized that there are national, state, and local interests in transportation programming and that transportation goals and objectives at different governmental levels may be dissimilar. A clear delineation must be made of programming requirements at different levels of government. There are national transportation needs and requirements, and it is appropriate for the federal government to issue detailed programming guidelines for the allocation and administration of resources at the state and local levels for the achievement of these national programs. Likewise, there are state programs and local and metropolitan programs. States should exercise control and direction over state programs and leave full discretion of programs only affecting local and metropolitan areas to those jurisdictions. Likewise, the federal government should not dictate, either through funding allocations or regulations, transportation programs that are essentially of state or local concern. The conferees recognized that by use of funding restructions and regulations higher levels of government can distort the transportation programs at lower levels of government. For example, the federal government can divert state and local resources into programs of national concern at the expense of transportation programs that have higher priority for state and metropolitan areas. By directing state resources into areas not in accord with state or local objectives and priorities, federal matching requirements, regulations and procedures, and categorical grants may unduly influence state and local programs. Unrestricted grants and reduced matching requirements may lessen the danger of such distortion. The conferees recognized that some federal programs, such as safety, need special national emphasis. Such overriding national interests should not be diminished by different state and local goals and objectives. Using state and local governments as agents for the federal government in achieving such national objectives should be funded either by providing grants or by requiring minimal local matching funds. The conferees recognized that, as categorical grants from the federal government are decreased, the need for better state and local programming is increased. In the past categorical grants have substituted to a large extent for local programming; if this type of funding is reduced, programming at the state and local levels must have a greater degree of sophistication. The conferees were concerned about who makes local programming decisions and the possible disparity between the local-level agencies that are designated by the federal government for planning and programming and the state and local agencies that are responsible for decision making and implementation. Conferees were specifically concerned that metropolitan planning organizations (MPOs) are designated as the local programming authority by federal regulations. This bypasses the state and in many cases is contrary to state statutes. It falls to recognize that MPOs are not the elected decision-making bodies and are not responsible for the implementation of programs. It may in fact make the MPOs superior to elected officials in transportation programming and decision making. The conference recognized the increasing role of the legislature in transportation programming. Some state legislatures are involving themselves at a high level of detail in the transportation programming process, and transportation programming is likely to become part of the statewide budgetary and programming process. The federal role in programming was specifically discussed. Although a need for guidelines and training programs in the programming process was recognized, the conferees felt that emphasis in such guidelines should be not on how to organize or structure the programming process but on how to program. That is, the process guidelines should be prepared so that they can be adapted to different state and local requirements. In the allocation of funds from federal to local transportation agencies, the states should be retained as pass-through agencies. The inconsistencies between federal guidelines and state statutes should be recognized. TREND TO DECENTRALIZATION OF DECISION MAKING

The conferees felt that program decision making should be delegated to the lowest feasible level of government. Because of a homogeneity of objectives in the past among federal, state, and local governments and the concurrence by the general public, a transportation planning and programming process has been developed whereby the federal government has taken leadership in development of interstate programs and state governments have taken leadership in development of state transportation programs. Local governments have exercised little influence. Because of the growing dissent by citizens to national and state transportation programs, the increased demand for citizen involvement in transportation planning, and the requirements for environmental protection, programming is becoming an inductive process: Programs are being synthesized at the local level and directed upward rather than being defined at federal and state levels and directed downward. Increasingly, local governments will define those areas of programming that are most responsive to their needs. At the same time, state and federal programs will not be permitted, except in cases of state or national interest, to preempt local programs or degrade local environments. This will result in a slowdown of the decision-making processes and thus make it more difficult to complete high-capital long-range transportation systems in urban areas. Therefore, we may expect an increased emphasis on low-capital projects and on projects for improving and upgrading existing systems. Because of the length of time between planning and final construction of transportation systems, to expect long- range transportation plans to be completely implemented is unrealistic. Therefore, the possibility of programming for small incremental segments that are completely functional units and that can stand by themselves regardless of whether the rest of the system is completed should be seriously considered.

TREND TO MOVE AWAY FROM FEDERAL MODAL TRUST FUNDS AND CATEGORICAL GRANTS

The conference participants recognized the current trend to move away from federal categorical grants and the current attacks on modal trust funding. They recognized that trust funds provide a degree of certainty and as such are desirable to the transportation planner and decision maker. However, they recognized the inflexibility of and the problems arising from modal trust funds and agreed that, if there is to be a trust fund, it should be a single transportation trust fund with few categorical restrictions. Transportation system development requires high levels of long-term capitalization. The issue is to be certaln of future funding so that long-term commitments can be made. This certainty can be provided through a trust fund mechanism or some other arrangements; but, if it is not provided, high-cost, long-term capital projects will be nega- tively affected. The conferees recognized that transportation, like education, welfare, and national defense, could survive without a trust fund and could be financed from a general fund. If such were the case, they saw the need for a reevaluation of the concept of user charges. If transportation is a public good as well as a special user service, then users should not be expected to totally pay for the service.

DIVERSITY AND DISPARITY ARE KEY ISSUES IN PROGRAMMING

The committee recognized that, because of widely differing values, goals, priorities, and interests, emphasis in transportation programming will be to maintain and improve existing levels of service and existing facilities rather than to develop new transportation systems. This brings into question the levels of sophistication required in the urban and statewide transportation planning processes. If the prospects are that statewide or metropolitan area transportation plans cannot be implemented during a 20-year period because of changes in values and priorities, then emphasis will have to be di-. rected away from long-term planning and toward 3- to 5-year incremental programming. The planning process will then be primarily used to define goals and objectives, which will require updating along with the program every 3 to 5 years. The planning process will ensure consistency in the programming and budgeting processes. The urban planning process in the past has not been able to address issues relating to project selection. These will be part of the improved and more sophisticated programming process.

CONTINUUM IN THE PLANMNG, PROGRAMMING, AND PROJECT-SELECTION PROCESSES

The planning and programming processes should be frequently reiterated, and project priorities reevaluated. If capital improvements are to be programmed on an incremental basis, programming and the master plan must be reviewed at the completion of each increment and before the initiation of the next element. There should be a continuum in the planning, programming, and proj ect- selection processes. Programming should include project definition and scheduling and provide for an annual reevaluation, amendment, and updating. Although cross-modal comparisons in programming are desirable, the lack of accepted techniques or methods for measuring such comparisons means that the elected officials are provided little basis for choosing among projects for differing modes. Summary of Workshops

RESOURCE AND FINANCIAL MANAGEMENT

Sources of Funds

Fund sources and funding techniques are as varied as the uses to which the funds are applied. Whether user taxes or other taxes such as sales and property taxes or lottery, is considered, the method of revenue production is not the important issue. The important issue is to initially identify the transportation goals that are to be met and then to demonstrate the method and cost required to satisfy those goals at each level of government. Whether the goal can be achieved by private investment should also be considered. After the goals and costs formulating those goals have been identified, the agency can then develop the funding mechanisms to finance the solution. The funding mechanisms that can be used to finance goal achievement include tolls, bond sales, general revenue funds, sales taxes, fuel taxes, fuel sales taxes, cargo fees, federal revenue sharing, income taxes, and permit fees. The funding source should have continuity to allow for effective program development. Although earmarking funds has the advantage of providing a relatively stable level of financial support, there is concern as to whether earmarking is the best way to finance all transportation programs. Some agencies, which have had no earmarked trust funds, have had success in obtaining funds for transportation from general revenue sources. There is concern that, if transportation programs are funded by general revenue sources at the state level and must compete with public aid, education, and other programs for those funds, the amount received by transportation may be gov- erned more by the political influence of the state secretary of transportation than by the merit of the fund use. Each level of government has the responsibility for raising funds although these funds cannot be rigidly related to the transportation needs at that level. For example, urban areas raise income by property taxes, and state and federal governments use the income tax. The needs for funds at each level vary according to its transportation functions or interests. General criteria for these functions are shown in the following matrix: Function Federal State Local

Uniformity or standardization x Safety x x x Interstate commission x National defense x Postal Service x General public welfare x x x Equity x x x Intrastate x x Landuse x x Farm to market x x x Urban regional management x x Process x x x Maintenance of services x x

This matrix reflects the general principle that it is most effective to exercise a particular transportation function at the lowest responsible level of government. Higher levels thus mount those transportation programs that cannot be more effectively conducted at lower levels. Ideally, funding sources for operating and capital improvement purposes should be the same, but, as a practical matter, some constraints are needed on both so that funds for both are ensured. One method of doing this is to include multiyear capital and operating costs in the same programming document to demonstrate the future consequences and costs of today's decisions and to demonstrate what options remain open for future decision.

Financial Planning

One aspect of financial planning is the impact of federal aid and capital grant programs on state and local programming. These impacts may be severe, and in many instances the mix between modes and within modes is determined by federal apportionment. Moreover, federal programs may distort local priorities, especially if local matching funds are required. By legislating constraints in response to lobby groups, Congress requires excessive defense of programmed projects on the part of local and state governments. Because of these constraining guidelines, federal programs do impact state and local programming. The question of impoundment must be considered when federal aid is discussed, for its use as an inflationary control measure affects the programming process. The uncertainty of funding causes a hesitancy to program projects for which total funding cannot be ensured. Therefore, adjustments must be made in programs to meet specific needs. The general adjustments made during periods of uncertain, and reduced funding delay improvements and emphasize other (secondary) programs. For transit, actions such as reductions in service and delays in equipment replacement occur. For highways and airports, actions include postponement of capital improvements and replacement facilities. In inflationary periods, only major capital improvements that contribute to inflation should be delayed. Program priorities based on availability of funds should be established in the order of debt service, maintenance, and standard and quality of service. A means of alleviating the effects of uncertain or reduced funding may be to shift funds among programs and modes. However, the relative rigidity of the federal-aid categorical grant program prohibits this type of transfer. The reason for this rigidity is to motivate all states to acquire a competence in all modes or suffer the loss of certain federal-aid grants. This has had the effect of creating varying degrees of program imbalance in most of the states. The most logical solution would be to create a federal transportation trust fund, eliminate modal or program grants, and thus provide each state with a transportation fund allocation to be used in accordance with previously certified programs by state and local governments. The criteria for future movement of funds among modes when a single transportation fund does not exist should (a) be more general than specific, (b) measure functions and not system or vehicle needs, (c) be aimed at mobility of people, and (d) determine whether the goals and objectives of local, state, and federal government have been met. Inherent in such criteria (which can be much more effectively evaluated at the local level) should be the objectives of conserving energy, meeting social, economic, and environmental concerns, providing for the transportation of the poor and the elderly, and meeting other concerns unique to specific areas. The use of nonrecurring revenues in a continuing programming process can result in a serious peaking of the work load followed by a sharp decline. This type of financing does test, via the justification process, more adequately the value of what is wanted. In some cases it locks in programs and prevents unreasonable external involvement. By this same special funding, future programming becomes less flexible. During periods of revenue shortages, a choice between increasing revenues or reducing service may be necessary. For transit, increasing fares to maintain the level of service on the facility may be advisable. A more serious decline in the use of the transit system results from loss of service than from a change in fare structure.

Revenue Allocation

Allocation of resources among modes should be made according to some general criteria. The criteria should incorporate those goals supportive of the basic social, economic, and policy development objectives of the level of government that makes the allocations. Specific criteria should include, but not be limited to, system continuity and integrity (planning), maximum aggregate benefit, legal constraints, practical implementation, environmental suitability, and subjective political factors. Federal, state, and local governments may have different values and goals for transportation. If national policy is at issue, the allocations should be made based on congressional mandate. If national policy does not conflict with that at a lower governmental level, the programming decision should be made at the level of government responsible for and capable of making the decision. Programming decisions at higher levels of government constitute constraints on programming decisions at lower levels. If conflicts in programs exist, lower governments must either overcome them through use of local resources or accept the limitations imposed.

PROGRAM DEVELOPMENT

The development of transportation programs is usually undertaken by an operating agency in response to legislative and executive initiatives. The citizenry must be involved in the formulation of program goals and objectives. In addition, transportation program development must comply with engineering considerations and budget constraints. Federal, state, and local governments should initiate and develop different types of programs. The federal government should initiate transportation programming if national interest is preeminent, if minimum standards and procedures must be established nationwide, or if coordination and consistency with long-range federal programs must be maintained. However, local governments have reacted to the Interstate Highway program and other interregional transportation programs in which they had little influence or control by demanding that transportation programming be based on local estimates of needs and objectives and be synthesized by the state and then by the federal government. The roles of the planner and elected official in programming and priority selection differ. The planner presents all appropriate, objective data that define alternative courses of action and their consequences, and the elected official incorporates subjective decision factors with those data and makes the final deciion. The official must place the transportation programming decision in proper relative position with other governmental resource allocation decisions. The criteria for selecting project priorities within a mode and among modes should be explicit, easily understood, and established by programming bodies in advance of programming decisions. Formulation of such criteria is of necessity a collaborative activity involving both technical and decision-making officials. The criteria should consider economy, environment, social factors, and system performance and levels of service. Included in each of these areas should be the following:

Economy—operation and capital costs, impact on local economies, and related public service costs (Will it generate need for new services?); Environment; Social factors—equity and usability by various groups; and System performance and levels of service —technical feasibility, safety, mobility, accessibility, amenity, and convenience.

The time span involved in programming is intermediate and is between the time spans of 2 somewhat similar processes: staging and scheduling. Staging is long range and is closely related to planning. It represents a generalized relating of candidate projects to future time periods and possible contingencies, including funding levels. Programming follows more closely in relating project priorities to available funds and other criteria for a 3- to 6-year period. Since transportation projects have complex coordinative and environmental consequences, programming must involve a high level of consultation with other agencies and affected groups. Scheduling follows programming to link projects closely with available funds in accordance with the priorities established at the programming stage. The time frame is 1 to 2 years. Scheduling and budgeting are functions that must be performed by the implementing agencies. Transportation programs must be both politically and technically feasible. Political inputs, in the best sense, represent the needs and demands of the full range of public groups concerned with transportation. Programs must thus include policies and projects that achieve short-term results as well as those that meet long-term requirements. Examples of the former are operating and low-capital improvements such as contraflow bus lanes, bus shelters, traffic operating movements, and parking policies.

Relation of Planning and Programming

The creation of metropolitan planning organizations as the formal structure through which federal requirements are met has real value as a forum for local expression and consensus in the development of transportation programs. However, if elected officials of local government are not included, these bodies will not be the final decision makers. It is evident that increased local involvement in decision making in the transportation process will change the process. The following list indicates some anticipated changes:

Slowdown of the decision process, Improvement in implementation because later citizen-caused delays are avoided, More difficulty in undertaking long-term major transportation projects, More programming of low-capital projects, More consideration of social, economic, and environmental concerns in development of the program, More total community program presentation, and Change in emphasis from transportation capital investment program to overall 10 community-oriented management of transportation program including closer look at future resources.

For an undefined time period, state transportation and highway departments will become less involved in construction and operation details and more involved in managing transportation, setting overall state policy, goals, and objectives, and assembling all urban and regional programs into reasonably balanced state programs. The basic problem, however, will be the transition of the responsibility for interregional and interstate transportation programs from state governments to local governments. Transportation development in a normal sequence of events is planned, programmed, budgeted, and implemented. Programming is thus a continuum of the planning process. However, the process is not sequential but cyclical, and, for the maximum transportation advantage, those who are involved in it must be able to enter the cycle at any stage as a beginning point. This realistic approach to transportation development is thrust upon us by many external forces acting on the process. These forces include energy shortages, fund shortages, federal and state legislative demands, budget opportunities, and expanded local involvement in program definition.

Defining the Criteria for Program Development and Priority Rating

Within modes, items to be included in defining needs and setting priorities vary. Broad definitions of needs and priority-setting criteria should first come from a planning process. Programming is neither a substitute for planning nor a function separate from planning, but should be linked directly by setting priority criteria, which are actually detailed specifications of the long-range plans, policies, goals, and objectives. The plan should set out the broad problem categories and the emphasis that is to be placed on each category. It should identify major needs or problems for which priorities, solutions, or projects will be advanced. The resulting program categories should be keyed to specific objectives to allow for meaningful priority criteria to be developed. Often program categories are based on funding categories, and therefore the priority criteria are a function of the legislative intent of the specific category. As more flexibility is obtained through less categorical funding programs, the need for goal- oriented programs within broad categories for implementing the long-range plan will become more necessary. Although most priority schemes are based on technical data, the actual priorities used to select projects to be implemented are often quite different and represent either stated or unstated political or regional concerns. Many states and organizations have helpful inventories, analyses, and systems that aid directly in setting priorities, but the system must be flexible enough to allow for changes in criteria and the emphasis on particular items as times change. Cross comparisons of priority ratings among modes reveal that most modal trade- off decisions have been political decisions based on limited data concerning their com- parability. Several approaches might be used to cross compare priority ratings. The first is to conduct an economic analysis of the relative rates of return on capital invested in alternative modes. However, the problem of nonquantifiable benefits and costs continues to plague this approach. The second method is to set priorities within modes and compare top priorities in each in a subjective manner. The third approach is to develop common performance measures or objectives that are not modally based. Examples are cost efficiency in moving people or types of goods and ability to serve or promote economic development. The fourth is to examine modal trade-offs at the community level during the detailed project development process. Both capital and operating costs must be considered as a total project cost in future programming. The need to look at the long-term operating cost implications of new capital programs is important. Given the flexibility to use funds for either operating purposes or capital outlay, the top priority should be to maintain and operate the existing system except in areas of high anticipated growth, where a trade-off must be made. There has been a tendency in the past to apply large sums of capital funds to alleviate problems that were really operating problems. Frequently this occurred because of 11

the lack of flexibility in funding categories. The current state of public transportation systems and the need to continue to maintain and rehabilitate the highway systems point to the need for increased flexibility. The legislative branch is reluctant to provide large sums of money for operating expenses because legislatures want to see physical results from funding programs and view operating funds as "going down the drain." The flexibility to use existing funds for both capital and operating costs and the mandate to look at the long-term total project cost could lead to more emphasis on low- capital solutions.

Program Identification and Project Development

The level of refinement in program definition is a function of the response to the present categorical grant structure and the degree of historical operational control imposed by funding and monitoring by federal or state agencies. A program should be formalized to the point that it can be attacked or defended at the project level. Overformalization such that programs in response to the same travel demand subtly compete for the same dollars at the local or state level in response to federal dollar options must be avoided. There is no point in overprogramming one segment of the system and neglecting improvement options in an interfacing segment that may be a critical bottleneck. An example of this is increasing air and runway capacity at airport sites, where surface transportation is highly limited and no improvements can be made in highway capacity. Projects are frequently redefined over time. Programs can be easily modified and redefined. The only requirement is that changes be consistent with overall program objectives. Cost-effectiveness analysis was employed as an alternative to the benefit-cost approaches to broaden the decision-making process for evaluating of nonmonetary consequences. Cost-effectiveness inherently works by evaluating a broad range of consequences of investment or plans at the system or project level, noting consequences of such alternatives to the decision maker, and asking the decision maker to weigh such consequences in his or her preference structure. Ultimately this process yields an optional alternative or a rank order of alternatives. The semantics of cost- effectiveness can be confusing, but the logic models of the processes are valid; success depends on the state of the art in measuring nonmonetary impacts and adequate use of technician-citizen involvement to adequately establish the preference structure.

DECISION MAKIIG

Government's Role

The government's role in programming varies in relation to the level of government. At the highest level, government reconciles the needs and desires of various constituencies and makes final decisions in light of implementation practicality. At another level, the legislative bodies in control of funds for a given program hold the ultimate veto power over the program, while the administrator of funds has veto power over specific projects. The power structure and the formal authority for decision making may not be the same. The many public agencies and private interests often have widely different views affecting programming. In recent years the number and diversity of such groups have increased, and each has become a legitimate component of the power structure. To build a working consensus to support transportation programs requires the persistent effort of public officials to identify and involve all affected groups in a mutual learning process including both political and technical aspects. Such community involvement in the programming process is a natural extension of the planning process. But legislative control has not been a part of programming until recently. Legislatures and executive budget offices are exercising an increasing control over 12 transportation even to the selection of projects. This is a legitimate function and will undoubtedly continue. To accommodate this function transportation agencies must involve these officials throughout the planning and programming processes to receive and coordinate policy inputs and to establish a supporting consensus on the benefits and requirements of multiyear programming. Stress should be placed on the lead time required for achieving the benefits of capital improvements and the efficiencies inherent in tight scheduling of projects in relation to cash flow and personnel. Federal regulations and guidelines impact the decision-making process in many ways. Guidelines have an immense impact on local decision-making processes and'. the articulation of local desires. Funding guidelines can restructure or redirect a program in a different way than local agencies wish. Guidelines that change the traditional government decision-making processes and that in some cases cause paper organizations to be created disturb cooperative agreements and can bring the process to a standstill. The proliferation of guidelines has also created inconsistencies that are not easily resolved. Unfortunately guidelines do not always reflect the variations in existing governmental interrelations and may attempt to impose a norm or a standard process on all participants. In these cases, guidelines frustrate local desires and impede the fufflilment of goals the guidelines were intended to achieve. Guidelines, therefore, must be carefully written (alter it is determined that guidelines are in fact necessary) so that their intent is clear and that emphasis is placed on achievement of desired results. The decision-making process, for programming and project selection, is complex and cannot be easily defined. A given project may have a hundred decision points throughout its programming phase and require approvals at many levels of government. This situation has prompted the question as to whether the process should have such an extreme bias in favor of veto. The evidence of this bias is that, even with 99 "yes" decisions in the 100-step process, only one "flO" vote is needed to stop the process. A simplistic model might indicate that the decision should be made at the lowest and most effective level responsible. The most effective decision-making level is probably the agency that has the responsibility for implementing the project. The frequent turnover of elected officials presents problems to programmers. The term of office is often 2 years, and projects, especially local projects, have frequent startings and stoppings. Programmers must accept the fact that frequent change creates problems. Several mechanisms can reduce the impact of change. Special programs can be initiated through the legislature and then quickly implemented. Newly elected officials may determine that it is wiser to accept the previous administration's program than to reject it and start over.

EVALUATION

Defining and Measuring Success

Different goals and objectives emanate from various sources. For any one program, however, each group may evaluate the success of the program against its own measure. Determining the degree to which objectives are met is one way of evaluating a program. At the political and public level, success is most often determined by the speed of project completion. Evaluation standards include output and performance criteria. The output criteria concern physical measures, such as number of roadway miles and structures, and the performance criteria concern the use of the facility. The problem of measuring success is compounded by the fact that values and views on success change between initial programming and final implementation and subsequent evaluation. The final project may be entirely successful according to the initial criteria, but may be unsuccessful according to current values. it is important to develop simple, easily measured, and demonstrated criteria from many different views, those of the transportation professional, the administrator, the 13 political leaders, and the public. Even though the criteria and the resulting view of success may differ, the measurement and apparent trade-offs are important to feed back into the planning and programming effort to guide future decisions. The criteria of success for the null alternative are based on agreement that the impacts of alternative solutions are worse than the problem. This information should be fed back into the planning process so that the same null alternatives do not continually become the decision.

Review of Program Implementation

The state review process interfaces strongly with the local viewpoints and development of compatibility of viewpoints. The following variations in the federal review process, were noted:

The Federal Highway Administration reviews content to see that national objectives are met; The Urban Mass Transportation Administration 'conducts an in-depth evaluation of transit system proposals and transmits its reaction to the metropolitan agency; and The Federal Aviation Agency allocates funds such that it can readily resolve competition for dollars at the local level and determine where federal money can be spent in the state. Programming.in Perspective

James R. Nelson, Amherst College Programming is flanked on one side by planning and on the other by budgeting; therefore, it must be assigned a pivotal role. The budgetary role is that of tinkering, of tidying up, of assigning specific numbers to the items on the laundry list. The programming role is that of marshalling all the options, weighing them against one another, and deciding not only what is the order of effectiveness among means, given the end in view, but also what is the order of relative efficiencies (as measured by costs) for each level of effectiveness of means. (As used here, the words "effectiveness" and "efficiency" are borrowed from Arthur Smithies: "First, how effective is a program in attaining its intended objective? Second, can existing program results be accomplished at lower cost? These questions attempt to draw a distinction between the effectiveness of a program in achieving its objective and the efficiency with which it is carried out." Planning takes place in the domain of chance. But the programming role is an intermediate role; it is a mediating role; it must continually interact both with the initiatives that arise at the planning level and with the consequences that are reported at the budgeting level. Occasionally there is essential feedback from programming to planning and from budgeting to programming or from budgeting all the way back to planning. Planning, in the sense of the exercise of disciplined forethought, is far older than the human race; there could be no sentient life without it. Budgeting presumably started with animals who had to find some way to get through the winter. It has proceeded from instincts of squirrels through knots in strings to notches on sticks to the latest computer model. If the Office of Management and Budget is a relative newcomer to the executive branch of the U.S. government, the powers it has, complete with checkerboard and treasury functions, have existed in Britain for centuries in the person of the Chancellor of the Exchequer. In the triad of planning, programming, and budgeting (PPB), then, programming is the upstart. Therefore, its credentials cannot be accepted without scrutiny. What is programming? What constituency does it represent? What can it accomplish? Given the prior existence of both planning and budgeting, why admit it to membership in the first place?

14 15

TRANSPORTATION PROGRAMIVIING IN PERSPECTIVE: LOOKING BACKWARD

Fortunately, the word "perspective" need not encompass the entire universe. We are concerned with what used to look like a relatively limited and bounded issue: transportation programming. We are concerned as well with when, how, and where transportation programming started in this country, with how and why it got to be where it is now, and to a limited and modest degree with what might happen to it in the future. The United States has been innovative in every form of transportation. DeWitt Clinton, as governor of New York, was responsible for the completion of the most elaborate canal the world had ever seen by 1825. "The Best Friend of Charleston" puffed its way over a route to a point across the Savannah River from Augusta, Georgia, which was by far the longest in the world at that time. James McNeill Whistler's father and eponymous uncle were the engineers of the first long-distance Russian railroad, from St. Petersburg to Moscow. Donald McKay's clipper ships led the world in a direction that lingers on in continued U.S. possession of the America's cup. The London Underground was promoted by U.S. financiers and dominated in its construction by U.S. engineers. And so the record goes, up to but not including the SST. The inherently free enterprise label, which is often affixed to the ideal model for U.S. transportation, and its free competition trademark are inventions of modern times: The economics of the motor carrier industry have been pushed back, unhistorically, onto other modes of transportation. Whether carried out overland or by inland waterways, nonmaritime intercity transportation has always and of necessity required government intervention of a kind that has in turn involved governmental planning. Pro- vision of a road system, a railroad system, or a canal system must start with the possession of continuous strips of property. Between the initial exercise of government power of eminent domain and the eventual application of public or private money, there must supervene a stage devoted to the familiar questions of when? where? how? to whom? for whom? and the lingering residues of the essential question of why? Thus, almost from the moment that American transport passed beyond the stage of providing rights-of-way for people on horseback and Connecticut peddlers, planning had to be supplemented by programming. According to G. K. Chesterton, "The rolling English drunkard made the rolling English road." The American colonies followed both the virtues and the defects of their parental model: the virtues, because there was a clear concept of a planned inland transportation infrastructure; the defects, because it was assumed, English fashion, that the labor of local residents who were paying road taxes in kind would be adequate to create and maintain a passable through road system. All that was expected was a thoroughfare adequate to provide passage to a horse bur- dened only with courier and mail pouch. But the growth of national consciousness was accompanied by a realization that the original 13 colonies either could acquire a few outriders, like Vermont, and watch the rest of the North American continent drift downriver to New Orleans or, conversely, would supplement north-south by west-east. The Erie Canal was only one episode in the translation of this basic realization into practical achievement. Other milestones included such apparently disparate events as the substitution of the Constitution for the Articles of Confederation, the Lewis and Clark Expedition, and congressional appropriations to be spent on construction of the National Pike. This realization of the importance of transportation was by no means peculiarly American. The steam engine liberated inland points all over the world, and the inter- action among coal, iron, and steam established the technological groundwork for the nineteenth century economy. The peculiarly American aspects of these worldwide tendencies arose because Americans had so much to do, so much space to do it in, so much enthusiasm for the job, and a governmental organization and political environment perfectly adapted to the task at hand and partially irrelevant to it. Hence, there were the need for planning, the desire for planning, and the necessity to be content with what never reached the level of planning but still gave a remarkable impetus to the development of programming. Specifically, the federal government charged off at the dawn of the modern transport 16

revolution in what proved to be the wrong direction. Beginning in about 1830, the last thing that was needed to tie the country together was a federally financed national road system. Yet this is where federal money went. Since members of Congress are not stupid, they balked at pouring very much money into what must have appeared as a doomed endeavor. Hence, there were a series of paradoxes: What the United States most needed in the early nineteenth century was an interstate transportation system; yet, the federal government provided it with only one stem of such a system and that too little, mostly too late, and of the wrong kind. Meanwhile, the need was being met by public planning and by a mixture of public and private programming. The degree of public planning is evident from the fact that transport needs were a central issue before state legislatures for most of the nineteenth century. Public officials could be elected or defeated almost entirely on transportation issues. Towns lived or died by the number of modes of transportation they could attract and by the number of carriers or transport enterprises that represented each mode. But, while transport was regarded as a matter of life or death, public planning was not always carried through into public programming. The Erie Canal was a total state enterprise—planning, programming, and budgeting. But Massachusetts relied on private enterprise to provide canals as well as railroads. And the infant states to the west of New York eventually discovered that they could not follow the New York example: Either their credit was inadequate at the outset or their credit ratings were swept away in the Panic of 1837 or their money had been placed in canals and not railroads or their funds had been dissipated in trying to nourish a thousand hopeful metropolises when no real metropolises yet existed. East and West, North and South, if the planning had originally been in public hands, the programming and budgeting eventually came to rest in the hands of private enterprise. The federal government rolled its port barrel to the seacoast in the form of rivers and harbors legislation, which might be described in terms of political planning and programming but defied economic analysis. The state governments generally stood aside as collective entities, whatever the commerce of their individual members with transportation enterprises. And private enterprises did both the programming and the essential budgeting, including whatever budgeting was required for state assistance. In the days of transcontinental railroadbuilding, Congress passed legislation that now seems unique. Private enterprises were assured of land grants or guaranteed loans or cash, which might even be awarded on the basis of miles of track completed. These guarantees were supposedly in furtherance of a national transportation plan and in fact did result in the general realization of such a plan. But, beyond the most sweeping principles, programming and most budgeting were left to private enterprise. As railroads came to dominate the transportation scene late in the nineteenth century, both the planning and the budgeting role were assumed entirely by private enterprise. Federal aids to railroads were discontinued alter 1876. The rivalries of private en- trepreneurs came to supplant state and local subsidies at about that time or soon there- alter. Since the railroads then provided the backbone of the internal transportation system, it would almost seem as if nineteenth century governments had solved the problem of the interrelationships among planning, programming, and budgeting by washing their hands of all three. This was, of course, not true; but it was not true in a way that almost underscores the truth of the preceding comment. State regulation followed close on the heels of the completion of the main structure of the U.S. railroad system, and this state regulation was greatly amplified and reenforced by federal regulation beginning in 1887. From its very beginning, regulation has provided a demonstration of the kind of concern for ways and means that lies behind the PPB approach. But regulation has not developed, and cannot develop, either a viewpoint or a procedure to convert this concern into a policy. Regulation involves a combination of inattention to planning and inadequate resources for budgeting. Of greatest importance, and of greatest immediate interest, regulation provides no framework for programming. There is a tendency to attack regulatory bodies for not doing what Congress never asked them to do and what they cannot possibly do and remain regulatory bodies. The inability that is at the core of 17 their other inabilities is their constitutional inability to program. The word "constitutional" might as well start with a capital letter, for the only people who lodge charges of nonfeasance against the Interstate Commerce Commission and other regulatory bodies are people who must not be familiar with the legislative record relating to regulatory commissions. They are not supposed to be active. They are not supposed to be innovative. They are not supposed to think ahead. They are not supposed to be engaged in converting general ideas or plans into workable realities. Instead, they are supposed to hold pressure groups one step away from Congress, to adjudicate disputes, to develop precedents that give carriers and users a comforting feeling of familiarity, and to effect workable compromises between economic reality and political reality. In short, we proceeded well into the twentieth century and well past the halcyon days of railroad monopoly before the word "programming" was even important for the public side of transportation. No public body did it; no public body could do it; and, aside from the Progressive Party in 1924, no important political group wanted public bodies to do it. And, on the private side, programming was never properly related to planning. Most countries have encouraged railroad monopoly, or ended up with it whether they encouraged it or not. Some have achieved, or had to be content with, a series of railroad geographical monopolies. In the unusual case of Canada, the pattern has settled into, a balanced duopoly. In the United States, the railroad map has developed in such a way that railroads can program and they can budget, if they can find the money, but they cannot in a true national sense plan. So, in the railroad industry, programming is beyond public powers and left open-ended in the sphere of private enterprise. When we turn from railroads to highways and waterways, we turn from responsibilities that were thrust off onto the private enterprise economy to responsibilities that the public economy had to assume without complete preparation. To start with waterways: The Panama Canal is not only a product of economic necessity but a memorial to Theodore Roosevelt's Big Stick. Given the Panama Canal, internal waterways' improvements were a political necessity. And, given inland waterways, the strategy of planning had to be turned over to political forces. Navigable waterways do not flow impartially through every congressional district. Neither do potentially navigable waterways. But, where they appear, the latter are at least can- didates for the same treatment that has associated rivers with harbors: They may be placed on the trading block as potential recipients of budgetary favors in exchange for other favors. This is planning in a truly democratic sense, but it is not the kind of planning that is likely to result in an optimum expenditure of public funds. Moreover, the political approach to planning that is applied to inland waterways has exerted ec- centric pressures on the programming body for waterways—the U.S. Army Corps of Engineers. Considered in isolation, the programming efficiency of the corps cannot be denied. The trouble is not only that the corps cannot be considered in isolation but also that the corps is open to the accusation that it has, itself, become enmeshed in the political planning process. This is not due to any perversity inherent in the U.S. Army. It is a product of special features of modern government expenditures for waterways.

Where they are available, navigable inland waterways provide transportation that is much cheaper per ton-mile than that provided by either rail or motor carrier. Whatever the gifts of nature, marginal navigability can be costly. On the assumption that the best is exploited first, marginal navigability involves exploitation of either the internal margin (more or bigger locks, deeper dredging) or the external margin (extension of the system into areas with a limited demand for water transportation, or a limited supply of water). If the benefits of such improvements are conferred on users at zero or nominal cost, the result is not only a clear waste of resources at the margin but possibly also a net waste of total resources.

In this atmosphere of "Every day is Christmas Day," programming may simply involve articulation of a more sophisticated plan for proceeding up -a blind alley. Thus, the paradoxical difficulty of waterways planning is that it has lost its anchor: Rational economic programming is impossible unless it results from, and can relate back to, 18 a rational economic plan. The highways case is so complicated that most comments about it will be reserved for the next section. But, looking backward, I see some points to be made as a preface to what is to follow. The first is that modern highways carry both the onus and the advantage of having started literally from the grass roots. The nineteenth century railroad in effect ex- tinguished the highway for any movement of passengers or freight beyond a radius of a few miles. The renaissance of demand for highways in the form of the Good Roads Movement was concerned more with uniformity than with competitiveness. Railroads began as local enterprises designed to serve a few favored locations. But by the out- break of World War I, they were viewed as the only feasible way to move freight or passengers between cities. The Good Roads Movement did not pretend at the outset to be able to compete with the railroad infrastructure. Thus, the movement had both the advantages and the disadvantages of diffuseness. It confused planning because it was everywhere, but it aided programming for the same reason. If anyplace has a legitimate wish for better connections with everyplace, how is one to program the optimum routes? This question leads to the second point, which is that the Pershing Report of 1921 broke through the planning barrier as far as first-class highways were concerned. A comparison of the interstate system that is favored by this report with the Interstate Highway System that is now almost completed leaves one with admiration for the Persh- ing planning, in a strictly highway framework and on the prescient assumption that long- distance highway transportation would become enormously more important in the future. The Pershing map not only was a plan but also provided the geographical backbone for a program. The only reason for hesitancy in praising its foresight is that the physical and economic geography of the United States and the distribution of population in 1921 practically told Pershing what to draw on the map. Meanwhile, to comment on two neglected members of the internal transport array: Until the advent of the private automobile, public transit in urban areas with popula- tions as low as 10,000 or lower was considered by both private and public opinion to be profitable and was treated as such. The only programming that seemed to be required of public authorities had to do with the level and structure of franchise payments they could exact. The appearance of the automobile, and the explosion of urban areas that ensued, raised problems that have most certainly not been solved historically and that therefore must be considered later as of contemporary interest. At the other extreme, in terms of growth as well as of geography, the air transport industry developed under conditions that could well be described in terms of planning, programming, and budgeting, but could still better be described simply in terms of encouragement. Here, as with roads, the problem was not whether government should have a role in the PPB process, but rather what level of government should assume this role and how the governmental role should mesh with private enterprise.

TRANSPORTATION PROGRAMMING IN PERSPECTIVE: A LOOK AROUND US

If the historical perspective of the last section was dominated by railroads and by private enterprise, the present outlook appears to be dominated by railroads and by public enterprise. But this appearance is misleading. At the moment, railroading is the source of the most novel programming, and perhaps budgeting, issues, especially if these are considered strictly within the context of transportation. But it is not the source of the most interesting issues that involve the relation between planning and programming, nor of the most interesting transportation issues that spill over from transportation into the general economy and society. In all of these ways, pride of place must now be granted to the highway and the vehicle that uses the highway. Once this has been said, the problem is to add anything that could possibly be news to anyone familiar with highway economics. The changes have apparently all been rung: on urban devastation, when highways are built; on urban deterioration, after they are open; 19 and on urban pollution, once they have developed heavy traffic volumes. This negative attitude toward the highway is inextricably related to the end of the American affair with the automobile, which, once a mistress, is now a wife, and therefore subject to dis- paragement from within the family circle. But, after one discounts the inevitable rhetoric of the kind of romantic movement that swept this country during the last decade, there remains a set of new social constraints within which highway transportation, highway planning, and highway programming all must operate. Some of these are purely negative in character. Others open up new possibilities for the future. Since attribution of the characteristics of positive or negative must in part be subjective, the programming implications of recent changes will simply be listed in no particular order of importance.

Highway Programming and the End of Isolation

The Good Roads Movement was based on the proposition that what was better for highway transportation was better for the country. Therefore, any highway program that could be defended on its own merits, in terms of cheapening or facilitating transportation, was a fortiori assured of a place in any government budget because it was expected to confer extra economic and social benefits as a by-product. In other words, the ex- ternai.ities of highway construction and use were assumed to be positive. This attitude had effects that permeated every decision pertaining to highways: planning, programming, and budgeting. The capital investment in highways was deemed to be so important that the only battle was between "pay as you go" and "go in debt if you must." For this special purpose, current budgets were not necessarily assumed to be adequate. Many governmental units did what any rational private business would do: borrowed against the future in order to accommodate a rapidly growing demand. Thus, social and economic isolation was expressed in the form of "any external effects of highways and of the internal combustion engine are likely to be beneficial; therefore, let us at worst assume them to be zero." It also enabled the highway budget to be split off in various ways from the general budget. Today both of these propositions have come into question. Programming, as the intermediary between planning and budgeting, must therefore assume a new burden of proof. A portion of the public budget that still, in many states, moves in its own groove (e.g., as exemplified by state constitutional amendments that restrict the use of sums collected from vehicle and fuel taxes to highway expenditures) now threatens to become unstuck. The planning problem is first to convince legislatures that a so- called tax on over-the-road transportation is actually of the nature of a price. The programming problem is to establish that the use of vehicles in fact confers net benefits at least equivalent to the costs. The budgeting problem is to prevent highway funds from being dissipated by measures such as giving budgetary priority to a freeze on subway fares in an economy where the price of everything else is increasing. The end of isolation is threatened from a number of different directions. Financiers and economic purists believe in the idea of the integrity of the budget and, therefore, disbelieve in special funds and in special programs supported by such funds. Harassed mayors want to maintain their urban mass transportation systems after part of the mass has deserted. Internationalists worry about the price of imported crude oil. Environ- mentalists hate gasoline fumes. But, however motley this army, it is still formidable. And to confront it or placate it or defeat it or surrender to it—whatever the strategy— requires that the tactical element be a new approach to programming.

Highway Programming and the Rise of Intermodalism

Until recently, the United States has reaped the benefits of its disadvantages. As a huge, sprawling country with a relatively sparse population, it needed a transportation system that could perform efficiently over long as well as short distances—hence, the persistence of railroads in freight transportation and the rapid growth of airlines in passenger transportation. With so much room geographically, there seemed to be plenty of room for everybody economically. Plans, programs, and budgets could be drawn up in modal pigeonholes. The collapse of the Penn Central revealed that these assumptions were fallacious— or at least outmoded. There is not enough room in the most densely populated part of the country even for our present railroad system and our present highway system. But this does not imply that both must be cut back. Rail mileage in the northeastern states is admitted on all sides to be excessive relative to the demands of the late twentieth century. Much of it was constructed to do things that no longer need doing or that can be better done in some other way. Moreover, the important highway programming issues probably do not concern the effect of substituting motor carriers for the services of railroad branch lines: Such lines will be abandoned because of inadequate traffic, and traffic that is insufficient to support any railroad at all would normally not be enough to congest parallel highway facilities. Instead, intermodal programming is likely to be most needed in connection with terminals, and terminal areas. This would be true even if there were no railroad crisis in the northeast or anywhere else, for objections to motor carriage on grounds of pollution, congestion, and so on must be concentrated where both the population and the trucks are concentrated—in metropolitan areas. And these metropolitan areas are also the most likely locations for extensive rail terminal facilities. From the standpoint of a new environment for intermodal programming and of new demands for intermodal programming, the main needs are likely to be far away from underused branch railroad lines and to relate to the hearts of metropolitan areas. An institutional structure, which is now beginning to grow up at the federal level and state by state, is capable of ministering to these needs. The U.S. Department of Transpor- tation and state departments of transportation in increasing profusion across the country provide a structure for intermodal transport planning, programming, and budgeting, which simply did not exist even 10 years ago. So intermodal programming is now at last possible from the supply side, if by supply is meant programming organizations with an intermodal orientation. But the mere appearance of this potential capability does not guarantee that it will be employed. Hard-pressed trustees of bankrupt railroads, subject to pressure from creditors on the monetary side balanced only against a partial vacuum on the transportation side, can be excused if they solve the terminal problem by alienating the terminal properties themselves. For example, in the midst of a furious, long-drawn- out battle about the future characteristics of a new West Side Highway on Manhattan Island, an announcement was made that 2 major freight yards, which once belonged to the New York Central and which still occupy large slivers of land in mid-Manhattan just below the present West Side Highway, are to be sold for real estate development. In terms of highest and best use of these particular pieces of real estate, this at least survives the market test for optimum allocation of resources. In terms of optimum multimodal transportation systems in relation to the total metropolitan and even national geography and economy, the jury is not still out only because the case has never come to trial. In metropolitan areas, intermodal transportation programming must relate to every aspect of the metropolitan environment; but, unless the transportation programming is brought into play on appropriate occasions, previous sources for the supply of transportation services may be converted into new sources of demand for transportation services (and not even necessarily demand for the same kind of transportation services or services by the same mode) without the intervention of any transportation programming.

Highway Programming, Impact Studies, and the Bigger Picture

Not so long ago, it was safe to commit the most obvious of transportation fallacies: to relate the benefit side of transportation programming only to the area benefited. Thus, it could be assumed that a measurement of the impact of a new highway or of a highway improvement told all there was to tell about the total effect of the highway. Since the 21

point to an improvement in any form of transport infrastructure is to enhance mobility and since part of this mobility consists of attracting new demanders and not simply improving transport conditions for the same clientele, it should be obvious that the total effect of new highway investment must be different from any one geographically limited impact. At the second level of sophistication, it would be reasonable to assume that remote effects on other locations and on other forms of economic activity should on balance be negative. New users of new highways do not drop from heaven; most of them do not come from other countries or even from other parts of the United States. The obvious implosion to match the impact explosion is to be found elsewhere in the same urban or metropolitan area. Thus, the traditional impact study and the programming based on the benefits it inthcates have both been open to criticism at the second level of sophistication: While you are concentrating with your microscope, what is being drained out of the rest of the organism? This is a fair preliminary question, but only preliminary; for the real answers must be sought at a third level of analysis, which begins by asking not just what is being drained out of the rest of the organism but what, on balance, is happening to the organism as a whole. Unfortunately, this kind of sophistication can lead into a veritable swamp of analysis. The only trails through this swamp are likely to occur in the form of the delineation of feasible programming options that then must be referred back to the planning stage and to the political decisions lying behind the planning stage with the suggestion, "You pays your money and you takes your choice." The fact remains that, when one goes beyond the study of immediate local impacts, the whole world crowds in for attention. Here the programming problem becomes one of preparing schedules of alternative possible net benefits based on different criteria and on different assumptions with respect to the mix of indirect and concealed effects that must be placed on the scale in order to measure the true net weight of the direct impact.

Highway Programming, the Private Passenger Vehicle, and Public Transportation

American self-flagellation is now taking a new form: People who drive to and from work every day in their own cars have abandoned their traditional ritual of cursing every other driver and have taken to castigating themselves. Not content with the increases in gasoline prices, the President is in favor of adding further to this increase by placing taxes on crude oil, which—in his original version—would have increased the landed price of crude oil by an amount almost equal to its total welihead cost in the United States only 2 years ago. Not content with the President's proposals, some Dem- ocrats have proposed placing all of the tax increase on gasoline and increasing the tax to some multiple of its present level. Public transit may be handicapped in the race because it has lost its rider, but it has become the sentimental favorite. There is certainly a point to all this; in fact, there are several points to all this. However, the truth remains that the cities with the most elaborate transit systems and the most substantial transit deficits are also the cities that on the average have tended to suffer the worst employment losses in the last few years. The further fact remains that subway systems have to be custom built; each is sui generis; and none provides much scope for interchangeable parts, economies of scale, or explosions of technical progress. This in turn, implies a number of things. The first is that subways are almost certain not to earn any appreciable return on the capital invested in them, even if they are economically and politically able to cover their operating costs. The second is that political tensions are bound to increase along the fault line that separates the fortunate haves who have subway systems and the unfortunate have nots who are deemed to be just too small or too young for such an honor. These tensions may become particularly acute because the most recent subways have involved large infusions of federal funds, and the newest subways are and will be in cities not much larger than those without them. The third implication is that the cities deemed to be ineligible for subways, 22 or at least for massive federal assistance for subways, are going to demand one or another highway improvement to enable their bus systems to operate more effectively and efficiently. Thus, for most of urban America, transit is not a substitute for highways but a complement for highways. The implications of this complementarity have not even sunk in at the planning stage. They cannot achieve any kind of rational fru- ition unless they have been carefully examined at the programming stage.

Highway Programming, the Highway Trust Fund, and the All- Inclusive Transportation Trust Fund

The semantic confusion in this area involves practically every confusion already mentioned, plus a few that seem to be created by the mere mention of the phrase "trust fund." As everyone knows, the administrative and technical problems of pricing out entire highway systems to users are so formidable that the task has never been at- tempted in practice. Therefore, highway finance has had to continue its historical reJJ.ance on taxes except for relatively isolated toll bridges and relatively infrequent toll i'oads. Taxes on vehicles, on parts and accessories, and on motor fuel might be described as quasi-prices. They are specific to the use of highways or to the possession of vehicles that may be expected to use the highways, but they are not specific enough to provide an allocation of funds in anything like the patterns—in time and space— in which costs are incurred. For a genuinely national system of highways, any attempt to allocate costs for each mile and for each hour of the year carries economic logic beyond pedantry into absurdity. But there is still a case to be made for any attempt at more specific road pricing that does not cancel itself out in the process of developing a pricing system. All of this presents genuine and complex problems for transport programming. But none of this has anything to do with the idea that highway trust funds should be opened freely for other transportation uses simply because the end result has to do with something called "transportation." And none of this has anything to do with the idea that a trust fund supported not by quasi-prices but by allocations from the general budget is logically on all fours with the Highway Trust Fund. What has happened in the trust fund area is that slogans have gotten ahead of programs. What is needed is study of areas of genuine cross elasticity of transport demand and further study of how these areas relate to positive or negative externalities resulting from the expansion of different transport modes. All of these are programming questions, which can only be approached by setting out the alternatives in orderly fashion. The trust fund idea has a genuine budgetary point because it at least promises a semantic shield against the vagaries of annual appropriations. But what is needed is to convert "trust fund" as a watchword into various possible forms of trust funds with various possible types of funding in order to program out certain essentially meaningless uses of the term and to array the remainder in some kind of preferential order in terms of their chances of achieving what needs to be achieved in total transportation development. So far, practically all of this section has either been concerned with highways or has reached out toward other forms of transportation only from a highway base. This emphasis is designed to offset a recent trend. What used to be state highway departments must abruptly change fronts in their new guise as transportation departments in order to deal with railroad problems, which are new to them if certainly not new to the industry. In the process, the much larger and more widespread problems of highway programming may get lost in the shuffle in 1 of 2 ways: Either the play of emotion with respect to the automobile may become so great that rational approaches to planning and programming come to appear impossible; or, in the midst of change, attitudes may freeze into a pattern of "We will fight it out on this line if it takes all summer." The relation of the highway to the city is still the number one priority question for planning and programming on the part of public bodies, not least because no 2 programs can be expected to look alike. 23

TRANSPORT PLANNING IN PERSPECTIVE: IS THERE A ROAD AHEAD?

The preceding section was full of only hall-concealed forecasts. Therefore, this section will be brief and in the nature of a summary. In spite of what was said in the previous section, the programming road ahead for freight is essentially a railroad. In areas other than the northeast coast, the basic geography of the country would permit the addition of highway capacity to handle extra freight movements over the road if such capacity were cost effective. In most areas other than the northeast coast, additional motor carrier traffic would not even create crushing new pollution problems. The environmental effects of freight movements are effects that are registered mainly in and near cities and that are subject to alleviation not so much from overall transport planning and programming as from special programming relative to the location of urban terminals, the siting of freight-using industries, and the pattern of time and place applicable to truck movements. When it comes to intercity freight transportation, innovations in the infrastructure made available to motor carriers would be most likely, and most justified, only if the railroad system completely disappeared. And the possibility of such disappearance is related neither to planning nor to programming, but strictly to budgetary considerations. The intercity railroad question is one not of creation but of preservation. As a question of preservation, the issue is, For how much residual capacity is the public willing to pay? These are primarily budgetary matters. Any required programming must follow a prior budgetary resolution. The road ahead for intercity passengers must continue to lead mainly through the sky for commercial passengers and on the ground over the same type of highway systems for other passengers. With respect to both urban and interurban passenger movements, those in charge of planning and programming must probably reconcile themselves to a continuation of the hostility and incomprehension that began to replace "good roads" enthusiasm by about the mid-1960s. One consequence of this is that programming must once again face outward toward the general public as it did in the period 2 generations ago when both road and airport planning were in their infancies. Facing outward means not that programming is substituted for public relations but that programming must show itself to be honestly sensitive to more parameters and to more different points of view. Sooner or later, some American explorer will discover that Europeans love to drive cars in spite of punitive gasoline taxes, which are not even meant to bear any relationship to the costs of highway construction and maintenance. He or she will also discover that excellent rail passenger transportation provides a complement to the automobile, but only in a limited way is a substitute for it. The only way to divert passengers en masse from automobiles to railroads would be to tear up all the express highways between Boston and Washington and engage in similar demolition elsewhere in the country. Such a proposal is not only unfeasible but out- rageous. However, highway programming is going to have to live with absolute solutions to relative problems. The synthesis of present antagonisms with respect to highways should not and cannot be reached by flinging handfuls of mud from the antihighway trenches to the prohighway trenchesand vice versa. It is going to require patient and more flexible planning and exploring more options in programming. Within cities, the really fundamental issues are beyond the control of anyone concerned with transportation. The future of New York City, or of the other older cities in the country, will be determined by a multitude of influences of which the 35-cent subway fare or the possibility of charging a toll on vehicles crossing Brooklyn Bridge or even the exact characteristics of a new West Side Highway probably belong far down the list. At the moment, transport planners have been forced into a defensive posture on almost every urban front. Schemes for which funds could be made available are considered to be harmful or at least not worth the cost. Schemes that enjoy editorial popularity do not seem capable of generating adequate revenues by themselves, or of attracting adequate revenues from others. One way out of this impasse might be to begin the development of what might be called "discontinuous or disjunctive" programming. This would involve the elaboration of alternative urban transport programs, at 24 least some of which depart from the present position of "fewer people love private transport, fewer people use public transport, yet more people ought to live here." On the basis of this Bermuda Triangle, something absolutely has to give. On the successive assumptions that each gives in turn, then in pairs, then all at once, what programs for urban transportation emerge? And, of course, does any model produce any prospects for really large-scale urban living? So much for the modal game and the urban and intercity game. What these pastimes come to is that all kinds of programs that once took care of themselves either can no longer do so or should not do so or can do so only very badly. Until just recently, each individual railroad company programmed for itself. Whether workable or not in the past, the economic underpinnings for such programming are now collapsing. High- way departments once could stick to highways. They must now become departments of transportation. Highways and airports were always popular, and the programmer could assume, subject to diminishing budgetary constraint, "the more the merrier." This is true no longer. Urban transit was supposed to be self-supporting from the fare box, subject to one major fiscal subterfuge or another. Although the subterfuges have grown, the prospects of self-support have declined. Transportation programming used to be able to work in a purely economic atmosphere in the sense that practically everybody could be expected to be either in favor of a transportation improvement or at least neutral toward it. Nowadays the pros seem almost spontaneously to generate the cons, and both combine to insist on political solutions. On every front, transportation programming must answer questions that increase in complication faster than the tools available for dealing with them. On practically every front, the demand is increasing for clear and simple answers that any person in the street—or any judge—can understand. The simple answer is obviously incompatible with the complex question. So where will it all end? Probably with budgets that are more open at both ends: to receive money for transportation from the proceeds of general taxation, and to divert money from transportation that was originally collected from transportation sources. This will be accompanied by more public, more conspicuous, and more newsworthy planning and with morepolitical influences of all shapes and sizes tugging on every corner of the plan. Certainly, moreover, there will be a need for more extensive and imaginative programming and a better grasp of even the most far-out options, just when much of the audience for such programming must be addressed in words that do not exceed one syllable. A chaotic prospect, indeed; but scarcely a source of unemployment for those engaged in programming. Federal Role i,n Programming

Theodore C. Lutz, U S. Department of Transportation Have federal programs, policy, and regulations distorted the competitive balance among modes? I think the answer is "Yes." But we are getting to an era in which I think some changes.will be made. In many ways, the regulatory reform drive, whether it be in railroads, waterways, aviation, or motor carrier, appears to have one basic goal: to allow a little more of the inherent economic advantage of various modes to come into play by removing the biases that the federal regulations have caused. I think we are discovering that much of this regulatory problem is tangled up with nontransportation objectives. Quite clearly a lot of it relates to rural growth policy and population redistribution. For example, the branch line controversy is not that important economically to the railroads, but it is vitally important to communities that see another link to the outside world disappearing. One of the goals of this regulatory reform is to allow inherent competitive advantage to operate more fully and to allow intelligent trade-offs in the economic sphere un- biased by federal regulatory policies that distort priorities. The second major federal policy change focuses on user-charge policy. We have built in inherent competitive disadvantages by the inequitable federal financing treatment. For example, it is frequently said that highways get all the funds in the De- partment of Transportation budget. In the fiscal year 1976 budget, highways received 50 percent, transit received 25 percent, and aviation received 15 percent. The point is not how much is in the budget but how much of that is a general taxpayer subsidy. For example, most highway users pay their full share of federal program costs, but highway studies indicate that heavy trucks do not. In this connection, the Senate is considering a tax bill that will repeal the current truck taxes. The legislation will directly affect heavy trucks. This is not only a revenue issue but clearly an issue of federal policy. Are we further distorting the imbalance by giving heavy trucks federal program assistance without requiring that the assistance be recovered from user taxes? Why is this important? The northeast rail report has a section on imbalance in federal expenditures. It makes the point that heavy trucks compete most intensely with rail, and one of the reasons that rail is in trouble is that it has been victimized by inherently unfair federal programs. In other words, its competitors are getting

25 26 federal dollars that are not recovered from the users. The best example of this is the inland waterway system. The Corps of Engineers finances all capital costs and $100 million to $200 million a year of operating costs, which are not recovered from the rate base. This means that railroads are put at a competitive disadvantage to the waterways because waterways get part of their cost base free and the railroads do not. We are going to further study the truck area. The choice is fairly clear: Either make everybody more competitive by properly adjusting the user taxes, or give everybody a general fund subsidy. Balanced transportation requires one or the other to be meaningful. Woven in with the user-charge issue and an important part of programming are trust funds, earmarked financing, and long-term financing. The country, in its financing of public transportation programs, has traditionally combined the advantages of long-term financing, prethctable formulas, and multiyear contract authority only with trust funds. There are few programs that have those advantages that are not trust funds. For the first time, however, we have achieved these programming advantages in the general fund in the recent urban mass transportation bill. The Department of Transportation has several basic premises that will serve to strengthen local transportation planning and programming. One is more flexibility in the use of funds, a broader range of modal choices with federal transportation assistance. Another is the use of multiyear contract authority. I foresee that during the next few years contract authority will become a more difficult subject under the new budget control act. We may have to move toward multiyear appropriations. In this connection, there are now multiyear appropriations in the government. One is to the Washington, D.C., Metropolitan Transit Authority, which receives 2 years of authorized appropriations at one time for the subway construction. We may have to move toward this approach because agencies must know in advance what they are going to get in order to plan effectively. The department's new aviation bill addresses user-charge policy. Interstate aviation is effectively financed by user charges now. However, we would like to see more of the operations of the Federal Aviation Agency financed from these user charges. We have proposed user charges for inland waterways. We have to analyze transportation investment in a way that openly recognizes the community development impact. For example, one of the arguments used by the proponents of general aviation is its ability to help many communities to attract new industry. This contention is worthy of study. Similarly, one of the arguments used by highway proponents is that highways attract industry. But do you have to have the tax base and the industry first before you get the transportation? Is transportation a necessary and sufficient cause for population redistribution? All are important questions. Certainly, the transportation department and other federal agencies must do a better job of analysis. In the area of regulation, the argument concerning the need to cross subsidize the unprofitable low-density lines with the high-density lines is raised immediately. This cross subsidy is basically set by the Interstate Commerce Commission or the Civil Aeronautics Board to make transportation available to certain communities. Should we continue this approach, or should we subsidize rural development more directly and perhaps more efficiently? Will the new budget control act restrict long-term programming to transit funds? Without effective legislative cooperation, it could. This situation is troubling to the Executive Branch because the trend should be away from trust funds. We are proposing legislative alternatives that will deemphasize trust fund financing. We do this to provide flexibility in the use of federal assistance by not locking governments into trust fund financing. To rectify this problem, we must either amend the budget control act or develop an alternate system that allows for budget review and yet facilitates needed 2- or 3-year delivery systems. We should not allow transportation policy to be dictated by a pro- vision that hinders long-term programming authority unless there is a trust fund. The budget process, in many cases, is not the most appropriate time to do a program review, and yet I see the trend in the government to place even more emphasis 27 on the budget process. It is one of the few processes that is real at the federal level, and I am sure that this is true also at the state and local levels. Perhaps we need a new decision-forcing mechanism, and maybe the programming or the intermodal forum is it. However, I do see the trend moving toward the enhancement of the power of the budget process. I am not sure this is a wise decision, but I am not sure it can be changed. My last point relates to an immediate department programming issue. How will we treat the flexible provisions of the 1973 highway act, especially the transfer of Inter- state Highway funds? How can we deliver the funds over time? Should transit sub- stitutes have an advantage over other highway programs? Those of us in the department feel that there has to be some recognition of the special programming, timing, and execution problems of the transfer provisions because our conventional programming process for the Interstate Highway System program does not accommodate the needs. We are working on this problem, and we will appreciate comments and sug- gestions. State Role in Programming

Harry R. Hughes, Maryland Department of Transportation Unfortunately, recent proposed federal programming regulations have tended to blur the role of the states and to diminish their importance in the planning and programming of highways and metropolitan transportation systems. The new federal guidelines in these areas will reduce the importance of the states by inserting the federal government into the allocation of state highway resources, elevating the metropolitan planning organization to the senior management position in transportation planning, and relegating the state to a secondary, cooperative role. Thus, in effect, the U.S. De- partment of Transportation has come forth with proposals that in one fell swoop undermine a big section of state sovereignty. The federal proposals will undermine the productive relations that have arisen in recent years between state and local governments. Most of the regional planning agencies are neither fish nor fowl. They are not responsible for the successful completion of specific projects. They do no funding. They are not answerable directly to the voters and citizens affected by their actions and decisions. They are essentially advisory in nature. And yet, incredibly, we find the U.S. Department of Transporta- tion proposing to raise them to the lead position in transportation programming, placing them above both the state and the local government involved. Outside the metropolitan areas, we find the federal government seeking to control the decision regarding which projects should be funded with federal funds and, by implication, which projects should be funded entirely by state funds. This has historically been the state's decision for the good reason that the state is in the best position to make it. We believe these new proposals will reduce the state's flexibility to use its transportation funds. We also feel that the proposals ignore the many real differences among states and install a standardized management procedure that replaces procedures that have evolved in response to different conditions and needs. The proposals will also increase red tape and result in further unnecessary delays. Finally, I believe the proposals range far beyond the views of Congress concerning the role of the states and the relations that should exist among the 3 levels of government in this country. As chairman of the conference of state departments of transportation, I asked for the views of the 28 conference members on this issue. I received many strong statements in opposition to the new federal guidelines. On the question of the new program-

28 ming directive, Howard Ullrich, of California, said, "We believe the adoption of this proposal would serve no useful purpose and would seriously delay our state's already depleted construction program, disrupt our overall financing program, bring about additional unemployment, and cause excessive initial paperwork as well as uneven work flow in the future." Billy Paxton, of Kentucky, responded, "We see no time savings or benefits afforded by the proposed procedure and feel that it would greatly restrict the management of the highway program by requiring added processes and severely curtail the built-in flexibility of the present programming procedures." Commenting on the new metropolitan programming guidelines, Alan Altshuler, of Massachusetts, said, "This effort runs in direct opposition to the traditions of our American federalism, whereby states and local governments may design their own governmental patterns within the broad limits ex- plicitly established by the Constitution and the Congress." Of course, Congress, being responsive to the "traditions of American federalism," has been extremely careful not to tread upon the sovereignty of the states in the transportation area. The statutory mandate is clear. Section 134 of title 23 states that the planning process must be carried out "cooperatively by the states and local communities." Section 105 limits the federal involvement in programming to the areas concerned with national defense, access to air and water transportation, safety, and certain primary interstate highways. Unfortunately, the U.S. Department of Transportation seems to have missed these congressional mandates. The recent programming proposals would ultimately result in a larger role for the federal government and the localities and a smaller one for the states. We believe these proposals will direct attention away from broad national goals and focus on the question of whether narrow technical procedures are followed precisely. We do not believe this is the way to ensure that the national interests are served. Instead of specifying procedures and regulations, let us specify national goals. In- stead of specifying metropolitan planning procedures, institutions, and agencies, let us specify evidence of a continuing, comprehensive, and cooperative process. Instead of specifying programming techniques, let us specify programming results. We already have a pattern for such procedures in the action plans and in the transportation assistance programs of several states. As a matter of fact, it ought to be perceived as a question of simple common sense that transportation guidelines should be directed primarily toward the establishment of broad, overall performance goals rather than the specification of narrow technical procedures. The essence of programming is the matching of limited resources to achieve a planned improvement. Programming thus deals with the basic problems related to determining the timing, the cost, and the funding methods of each transportation improvement. In a democratic society like ours, this inevitably becomes a political process. At every level, elected officials seek to achieve the goals and priorities they believe most suit the needs of the electorate. This is true regardless of the level. It affects Congress when it determines the national interest in a vast highway system, it enters into the deliberations of a state legislature that is trying to encourage public transit, and it affects a county council that wants to widen a local highway. In addition, of course, we must recognize that sociological, demographic, economic, and political conditions vary from state to state. These variances, of course, are reflected in the way states perform their functions. For example, some states control every major road in the state. Others leave major roads to the counties and municipalities. Moreover, it seems to me that we must recognize that the states are changing not only in organization but also in the emphasis they place on the different forms of transportation. Highways are no longer the principle and only concern. In many areas, public transit is receiving considerably more attention. The transportation needs of metropolitan areas are being determined more accurately and plans are under way to fulfill them. There is wide recognition of the need to consider environmental questions and to achieve increased community participation in the transportation planning process. Many states are setting up more capable and efficient 30 state transportation agencies and administrations. Many now have truly unified planning and funding programs. It should be clear that the states have the lead in transportation. Some states, for example, provided operating support to transit systems long before the federal government got into the act. Some states own and operate transit systems, aviation and port facilities, and railroads. Some states have even been courageous enough to substitute transit projects for major highway projects. It is time to take a new look at what exists in the states. It is time to redefine the federal-state relation and to emphasize a more effective federal role. We in the states would like to see a recognition of the differences existing among states. We believe that such a recognition would lead to the establishment of planning and programming procedures that are truly multimodal and of one set of requirements for highways, aviation, and transit. We believe that federal guidelines should allow states to tailor their planning and programming processes to fit their own unique institutions, needs, and resources. This is an exciting and challenging time to be in the transportation field. Surely, when the nation is faced with its most severe economic crisis since the depression, we should have the highest degree of cooperation and understanding. I am sure that people of good will at all levels of government can work together to resolve the differences I have described today. Local Role in Programming

Milton Fikarsky, Chicago Regional Transportation A uthority I will discuss a current case history concerning programming of public transportation at perhaps its utmost effectiveness. It comes from the Regional Transportation Au- thority for the 6-county area of northeastern Illinois. Coordinating public transportation in this area is a challenging job. We started with one of the best developed metropolitan transit systems in the world, excellent commuter rail services, and some out- standing suburban bus companies. We also have a great variety in rider needs, family living styles, and patterns of occupational and residential life. Some of the 6 counties are more rural than urban in their nature. On the other hand, our industrial plants and corporate offices are widely spread, and some workers must travel great distances to get to their jobs. A proper balance of urban and suburban interests is an important factor in all our programming. Our Chicago Regional Transportation Authority (RTA) is required, by its statute, to hold public hearings in each of the 6 counties to develop an annually updated 5-year program and budget. We shall do that for the first time in June. The transit input meetings in which we are not involved will be helpful in establishing the key projects to be placed on the public hearing agenda. I think that the role of the local agency in programming is the most meaningful one. There are several reasons why. First, the local agency is the closest to the service to be performed. The success or failure of that service is crucial to the local agency—even, at times, to its survival. Second, the local agency best understands the environment in which the end results of the granting agency must be accomplished. Third, if programs fail because proper procedures are not followed, it will be the local agency that is blamed. The higher level agency providing the grant is looking for an end product—a result— that is uniform throughout the country or the state. And the programming must really be done where these dollars are converted to this objective. The few conflicts and tensions that do arise among federal, state, and local agencies are generally concerned with the interpretation of guidelines. The funding agency is responsible for providing guidelines that are relevant to state and national issues. Within those guidelines, the funding agency must review and approve programming procedures of the local agency. I advocate adherence to the fundamental federal and

31 32

state performance objectives, provided that flexibility as to how that objective is at- tained in each local instance is given equal recognition. To illustrate: The goal of a guideline is to provide the handicapped passenger access to public transportation. Every responsible local service accepts that premise and everyone wishes to provide that access. Local programmers and engineers are best equipped to determine the most efficient and safe method of attaining the objective on their own systems. The operating modifi- cations and construction specifications to do this may vary among areas. To pinpoint these specifications in the guidelines is often to prolong the completion time and foster economic waste. The local agency should avoid any tendency to be so eager for a particular type of funding that it allows itself to get boxed into unrealistic and unworkable guidelines. However, local programmers have the responsibility to conduct continuing analyses of how their programming is working out in implementation and how well the end-result objectives of the grant are being met. The overall goal of the funding agencies should be to increase the level of analysis being carried out by the local agency and the consistency of feedback as the programming proceeds. What are the responsibilities of the local agency in the performance of its role? First, and most important, the local agency must provide a soundly analyzed program. All possible alternatives, not just one magic formula, should be considered. Advocates of each alternative should have an opportunity to present their arguments. Programming acts as a checkpoint on planning. It applies resources to plans that have been made in an unconstrained framework. The programmer should carry no personal or implied responsibility to the planner to prove his work. For this reason, I feel it best to make planning and programming separate departmental functions. Second, the local agency bears a responsibility to be actively involved in the formulation of the national and state guidelines. Any oversights in policies promulgated by funding agencies cannot be recognized until they are pointed out. The specialized knowledge and case experiences of the local agency provide the only way the federal or state agency has of recognizing the variations that must be accommodated. The local agency is the proper focal point for decision-making on the nature and time phasing of the program in that area. And the local agency is where the inputs of 4 major audiences can be most readily collected and analyzed. First, there are the political leaders. They are not only acutely sensitive to the needs and desires of their constituents. but also aware of political realities, of what projects can and cannot be accomplished within the existing local climate. Second, there is the transportation administrator. This office has the resources to analyze the changing needs of users of the service because, in essence, that is the total business of the office. The transportation administrator ensures objectivity in the evaluation of impact on the rider, the potential rider, and those who never ride at all. I call this latter, highly important group transit independents, but we are not so independent of them, for they usually cast the majority vote on a question such as the creation of a regional transportation authority. They must be led to see the benefits of public transportation to them. Third, there is the programmer who must have the most professional attitude of all. He or she must look thoroughly at the various alternatives without being a prejudiced advocate of any one and remain cool under political pressure, refusing to be swayed by it. The programmer must also respect political input as a part of citizen involvement and not regard it as political interference. Fourth, there are the citizens. If a faulty program is being implemented, citizens are the last link in the chain. It is the responsibility of the local agency to keep citizens informed in order that they can express themselves, should they do desire, as early as possible. This is one of the major reasons why the local agency needs an information office that knows how to meet the needs of community media. When it comes down to it, then, the local agency is the most responsible for whether the program is workable, efficient, acceptable, and effective in the attainment of the funding agency's overall goals. If the program is good, the chances are that it will 33 survive despite any changes in elected officials in the local area. I am particularly conscious of the importance of coordinated local programming in the tremendous assignments facing the Chicago Regional Transportation Authority. RTA itself must remember to respect the superior local knowledge of local programming. The job of the RTA is to coordinate the programs of component transit agencies and districts—the South Suburban District, the Great Lakes District, the West Suburban District, and the Chicago Transit Authority—all with well-established systems and all in constant communication with the communities that they serve. The importance of local knowledge is one too easily forgotten in these days of growth and regional interdependence. If we rember to accord local programming its proper role and position, we will be able to master the most complex situations, which are, after all, only combinations of less complex problems. Resource and Financial Management: Some Persistent and Perplexing Programming Problems

Raymond T. Schuler, New York State Department of Transportation Financial management is a broad and all-encompassing subject and can be as profound and controversial as whether to continue the Highway Trust Fund or as simple as how to correctly complete a travel voucher for attending a conference. Financial management must deal with questions of accounting, budgeting, taxation, economics, long- range planning, forecasting, and a host of others. Out of this broad range, I will examine what I believe to be four of the most central and fundamental issues that are essential elements in forming the resource basis to finance a transportation program. These issues are level of funding, structure and sources of funding, allocation of funds, and control and continuity of funding. This paper will examine each of these issues from a general perspective to identify what the major problems are, what approaches have been followed in the past to solve these problems, and how successful the solutions have been. I will then set out New York State's philosophy and experience under each topic. This may provide a start toward discussions of potential, desirable, and workable methods to deal with these 4 central issues. First, I should like to make some general comments about the overall environment that we work in and that we must deal with. Of the many factors that are present in the world of transportation program planning, management, and analysis, the following are ever present, cannot be dismissed or ignored, and must be understood and accounted for in all actions.

Complex and conflicting organizational structures. Conflicting responsibilities within the department of transportation can make it difficult to reach the best solution to a specific transportation need. Effective transportation solutions may also be made difficult by differing opinions and priorities among the legislative, executive, and judicial branches of government and the various levels of government: federal, state, regional, and local. An example is the situation many transportation departments are currently facing in trying to get the UMTA transit funding program under way. So many bases have to be touched that, even if all of the transportation and other officials at every level of government agree on the worthwhileness and urgency of a specific project, too much time and effort are spent in securing the funds. Complex nature of transportation projects. A transportation project usually is

34 35 not a simple, isolated entity. Improving a highway facility can affect numerous other social, economic, and environmental aspects. We must also consider alternative uses of the scarce resources that a given project would require both before and during the programming process. Unfortunately, the funding structure for transportation projects is usually not flexible enough to completely accommodate the complex nature of these projects. 3. Continual change and uncertainty. Even if we lived in a fixed world, solutions to problems would still be difficult. But we do not, and the difficulties in determining the appropriate course of action to follow become compounded. Problems such as inflation, recession, energy, and economic development seem to get worse, develop more quickly, and entangle more and more concerns and interests. Better planning might make us somewhat more prepared for the future, but we will never be able to foresee all contingencies. Therefore, we must be ready for the unexpected and be more flexible in the face of change.

LEVEL OF FUNDING

The first issue to consider in resource and financial management is the appropriate level of funding for transportation. The questions are, What should be the level of funding available for transportation improvements? How should it be determined? The usual answer is frequently in the form of another question, What is needed? The real challenge then begins because to reach agreement on the definition of needs is difficult. That is not to say that there are not real, obvious needs that everyone recognizes. For example, when 200 to 300 people are packed into a subway car designed for 80 people, almost everyone (especially the 300 people in the subway car) would agree that the situation is intolerable and deserves attention. Similarly, everyone will usually agree on the replacement of an old bridge that has posted load limits because of its structural inadequacy and that is beyond the point of minor rehabilitation. However, transportation professionals do not like to admit that things must get that bad before we can agree on what the needs are. We usually perform detailed technical studies of the transportation system in order to determine needs for improvements before intolerable situations develop. In this way we can start the process, which may take several years, to meet an anticipated need. In the federally sponsored national highway and transportation studies, needs are based on identifying conditions below minimum tolerable levels that are technically specified. The dollar cost of these needs consists of the costs of improving facilities to acceptable design standards, which are set at a level higher than the minimum tolerable. These national highway studies have proved useful in many ways, such as in identifying the general condition of our national highway system and determining how much it would cost to improve it to current design standards. They also raised questions about the validity of our previously accepted standards, which can result in bank- rupting solutions to transportation problems. An important lesson we can draw from these studies and the subsequent federal highway and transit legislation is that there are inevitably conflicting opinions among the so- called transportation experts, members of Congress, and state and local legislators. The question of an appropriate level of funding is answered almost exclusively in the legislative branches of government. Administrators can only try to influence these decision makers by providing comprehendible and factual analyses of the alternatives and recommendations. Another commonly followed method of determining an appropriate funding level is based on an incremental philosophy. In this approach, only slight deviations are made from previous practice, and the funding program is continued essentially at the same levels. This has been the most frequent approach in past federal highway legislation. Since the establishment of the Highway Trust Fund in 1956, successive highway acts have done little more than to authorize the expenditure of money that came into the trust fund. Increased funding was due to an increased accrual of revenues rather than to increased needs. I do not want to question the value of this incremental approach. 36

It is a natural and reasonable course of action, and one that is adequate in many situations. It is not, however, the only .course to follow; and, in the light of changing circumstances, it may be an intolerable approach. New York State's experience with this issue has probably been more typical than unique and so will not be discussed here. I would like, though, to discuss our philosophy and position on the question of an appropriate level of funding. It is not so much that we require more money for transportation improvements because of the demonstrated needs but that we affirm the factual results of the needs analyses that have provided meaningful information on real transportation problems. The results of the analyses must be tempered, however, by the response to the underlying questions: What can be purchased with the varying levels of potential funding? What sort of system performance and service would be provided? Although we continue to recommend increased transportation funding to legislators, we also present data on the effects of differing levels of investment in transportation so that the decision makers and the general public will know what they are getting for whatever level of funding is finally appropriated for transportation programs. Although needs studies are beneficial in determining an appropriate overall level of funding, they do not help in determining how funds should be spent. When funds cover less than total needs, say, only half, is it better to solve all of half the problems or half of all the problems or some mix in between?

STRUCTURE AND SOURCES OF FUNDING

The second fundamental program planning problem concerns the structure and sources of funding for transportation projects. Where should the funding for transportation projects come from? How should it be set up fiscally? The answers usually deal with 3 aspects of financial management: the desirability of dedicated funding, the meaning and use of so-called user revenues, and the choice between bonding and pay-as-you-go financing. The federal government and about 90 percent of state governments have highway trust funds. New York State is in an almost unique position by not having dedicated revenues. Dedicated trust funds seem to have been established chiefly for 2 reasons:

They ensure a continual source of funding for transportation improvements. Highway users and the benefits and costs they receive from highway facilities, many believe, can be isolated and separated from the rest of the socioeconomic activity system that we live and work in. Therefore, highway revenues and expenditures were thought of as an entirely self-contained system with no external benefits or costs.

The deficiencies of trust funds have manifested themselves in several ways. For one, administrative practices such as impounding funds and setting obligational limits on the amount of money a state may spend out of its total federal apportionments cause fluctuations in the level of available funding. Funding is not really ensured. Likewise, the recent and continuing energy crisis has caused a decline in gasoline consumption and a corresponding decrease in trust fund revenues. In addition, trust funds frequently must be put to specific uses. This prevents flexible or adaptive solutions that are responsive to changing transportation needs and circumstances. I do not mean to downplay the value and usefulness of trust funds to transportation programming and financial management in the past several years. Nor do I totally rule out the possibility of improving the trust fund concept. I believe, however, that we should avoid getting so tied up in arguments and discussions of the sanctity of dedicated funding that we forget that trust funding is only a means to an end. We have to be more alert to the overall results of the financial structure that we have so that we can work to achieve urgent transportation goals. In New York State we have generally—and on average—spent much more on highways than we have collected in highway user revenues because of the recognized role of transportation in our economic and social structures. Another aspect of the issue of the structure and sources of funding for transportation 37

deals with the myth that user revenues pay the full costs of the facility. The term "user revenues" refers to the taxes that users of a certain mode of transportation pay. For highways these revenues consist chiefly of the gas tax, vehicle registration and driver license fees, tolls, and truck weight taxes. For air transportation the boarding tax, charged for each person arriving or departing from an airline, is one type of user revenue. There is no user revenue tax for public transit although the fare could be considered as one. User revenues are separated from other general forms of revenue from taxes on income, sales, and property because of the belief that the taxation of and expenditures for a certain mode should be completely isolated from the rest of the transportation system and other government operations. Recent experiences seem to indicate the folly of that belief. Many people have never really favored isolating transportation user revenues since the "price" charged bears little relation to the total cost of providing the transportation facility to the user. For example, a major external cost of highways is their environmental impact. Pollution and congestion costs are borne by nonusers of the highway facility. In all forms of transportation, it has become obvious that there is not even a close let alone a one-to-one correspondence among those who pay the user charges for a transportation service, those who gain the benefit, and those who bear the cost. One of the justifications for government subsidies for public transit, for example, is based on the fact that transit service benefits more members of society than just the users. The benefits to the automobile users who enjoy reduced congestion levels and to the infrequent users who have a stand-by transportation service illustrate the nonuser benefits from subsidized transit service. In addition, there are the benefits that relate to the land being served by transit, employment, business activity, and increased tax returns. I believe justification for treating user revenues separately is difficult, except on the practical basis of their being sources of income. Although user revenues can be dedicated to a transportation trust fund, they should not be reserved exclusively for a specific modal purpose. Our position on this issue in New York State is to maintain user revenues at the federal level, but to set up a new multimodal transportation fund that would receive revenues from all forms of transportation and disburse funds to all types of transportation projects. There would be no modal, categorical, or administrative restrictions on the funding. We will then be able to bring our fiscal resources directly to bear on our urgent transportation needs and problems. A better approach would be to let the tax be imposed nationally but collected and kept by the state for use for any transportation purpose. The last issue under the topic of the structure and sources of funding concerns the question of the bonding approach to financing transportation capital improvements. The alternative to bonding is commonly referred to as "pay-as-you-go," although with the long time required to accumulate and invest funds pay-as-you-go more often becomes pay-before-you-go. The argument in support of the bonding approach to financing is based on the fact that a large-scale capital improvement has a long life and results in benefits during that long life. Therefore, it should be paid for as the benefits are being received during the life of the project rather than at the time of construction. This is the manner most of us pay for major personal capital investments such as a car or house. How- ever, bond financing has to be approached carefully. Many people fear that a current government administration may overspend and thereby overcommit future generations to a too great debt burden. New York State has had extensive experience with setting up bonding programs to fund transportation projects. One of our most successful endeavors was the $2.5 billion bond program in 1967 that provided $1.25 billion for highway improvements, $1 billion for public transportation, and $0.25 billion for airport projects. Later bonding attempts in 1971 ($2.5 billion) and 1973 ($3.5 billion) were resoundingly rejected by the voters. However, a $250 million bond program to be devoted entirely to preserva- 38 tion of the state's rail facilities was overwhelmingly approved in 1974, at a time when voters across the nation were rejecting most increased government spending programs. We have learned the following lessons from our several bonding program attempts.

Full and complete information must be provided the public on all aspects of the bonding program. The uses of bond funds have to be clearly explained in terms of projects, the time frame for expenditures, and the regional allocation (if any) of the money. Bond funds should not be relied on to provide the total monetary resources for transportation capital improvements. They should rather supplement sources to finance urgent, critical improvements at a more accelerated pace than would otherwise be possible.

ALLOCATION OF FUNDING

Allocation of funding concerns answers to the question, How should an aggregate level of funding be allocated among geographic areas, several purposes, and various modes? By allocation, I mean the distribution by either legislative or administrative direction of an overall amount of funding to program categories or geographic areas. I would include as types of allocation both the division of the Highway Trust Fund revenues into the categorical interstate, primary, secondary, and other programs and the apportionment of any one or all of these programs among the states. The issue of allocation of funding is the most central of the programming funding problems, and it ties together all of the other issues. Through allocation, resources are specifically brought to bear to meet a given transportation problem. Categorical allocation of funding has been typically based on channeling revenues to fairly specific groups of problems whose extent and priority are based largely on federal perceptions. Thus, we have separate programs for economic growth center highways, for urban high density corridors, for high hazard locations, for roadside ob- stacles, and so on. The practice of funneling funds into specific transportation programs may have been necessary to ensure that groups of problems were answered, but it was disastrous in numerous individual cases. Categorical programs frequently forced improper and sometimes undesirable solutions rather than the best solutions to given problems. But rather than list the problems caused by categorical fund allocation, I will suggest solutions to the problems. What is obviously required is a drastic reduction in the number of categorical funding programs. I understand that the Federal Highway Adminis- tration is proposing that all current federal-aid highway categories be consolidated into four: interstate, rural, urban, and safety. I think this is a praiseworthy idea, but I would be happier still if the categories were consolidated into two: interstate and all others. Similar consolidation would be possible in the new transit act. Because I recognize the national significance of the Interstate Highway System, I can understand how, rightly, those funds should be considered separately. However, for almost every other type of transportation project, I feel that the proper form for federal-aid funding should be a single transportation revenue-sharing grant. Under this concept, all noninterstate, categorical federal-aid programs would be eliminated. In their place, the federal government would return a single transportation fund to each of the states, or have the states collect and keep the tax revenues received in that state. The funds could be spent as the states saw fit on any type of transportation project, and little or no bureaucratic regulation and administration at the federal level would be required. All that should be required is that the states annually report to the federal government on how the money was spent. The time-consuming and bothersome studies, plans, and reports on what the money is to be spent for would be eliminated. Thus, the funds would be directed to actual transportation improvements rather than being wasted on paperwork. Such an approach would permit each state to use whatever resources are available to meet its individual needs. Before leaving the topic of allocation, I should also discuss the geographic aspects 39 of allocation. The rationale for dividing a total amount of resources to subareas (for example, to individual states) is based chiefly on 3 theoretical considerations: needs, equity, and maximization of overall net benefits to a given subarea. The first consideration implies that a judicious distribution of any resource should give relatively more to an area that needs relatively more than to another area. Similarly the issue of equity requires that an area that contributes relatively more to the overall revenues available for distribution should receive a relatively larger share than another area. The final consideration is also based on common-sense wisdom of attempting to furnish the greatest benefits to the most people. Although there is probably no one method for allocating funds on which everyone would agree, we believe two improvements would be appropriate. The first is to use realistic parameters related to the subject at hand to allocate funds rather than am- biguous data that may accidentally produce satisfactory results but that have no logical basis for doing so. Technical transportation data, say, passengers carried or vehicle miles, are more appropriate to use than factors such as mail route miles or population. The second is to provide a certain limited amount for administrative discretion to meet unexpected but urgent needs rather than to lock in the funds in every area. I would not propose a totally discretionary allocation policy, for the states must have reasonably accurate information as to what resources are to be available if they are to plan ration- ally for the judicious expenditure of such resources.

CONTROL AND CONTINUITY OF FUNDING

The last aspect of programming funding problems concerns questions about the control and continuity of funding: What are the effects of inflation, administrative practices, and crises (energy, transit, fiscal) on transportation funding? What can be done to deal with such effects? Inflation has been increasing at an enormous rate during the past few years—so much so that $1 worth of federal-aid construction in 1967 now costs $2.10. Such severe changes in the costs of a transportation project make it difficult to plan effectively for the expenditure of the limited available resources. Although prices are now apparently leveling off, I think we will have to learn to live with at least a moderate annual increase in the cost of everything we do for the next several years. Another problem that upsets the smooth control and continuity of funding at the federal level is the recent administrative use of impoundment, establishing obligational ceilings to limit a state's expenditure of already apportioned federal highway assistance. To perform necessary project planning and scheduling activities is quite difficult when funding fluctuates widely during a short period of time. Many other examples exist of continually changing circumstances that cause problems in the management of transportation resources. The energy crisis, for one, not only has had a significant effect on the rate of accrual of user revenues but also has caused us to rethink our goals and priorities about the types of transportation projects we plan to advance. The growing transit fiscal crisis caused by a decline in ridership in the face of above-average cost increases presents a serious challenge to our ability to respond to a highly important transportation need. Although many of these continuity and control problems cannot be avoided or eliminated, we can take positive actions to be able to deal with them quickly in a forthright maimer. Our state's philosophy and approach to these ever-recurring problems is as follows: We need a minimal assured level of funding during a fairly long period of time, at least 4 to 5 years. Only in this way can we make efficient use of the transportation dollar. However, because of unforeseen and uncontrollable future events, we need to maintain flexibility in the types of projects we can advance with these transportation resources. The restrictions and requirements on the funding available to us must be eliminated or reduced. Such flexibility will come from a full gamut of actions—from eliminating categorical federal programs to making internal adjustments to produce the best type of solution for a given transportation problem. Implementation and adoption 40 of these ideas may be difficult, but they are about the only way we can regain some continuity and control of our funding.

DISCUSSION

Robert W. Nelson, Metropolitan Atlanta Rapid Transit Authority

A transit agency that does planning and programming is not, and should not be, concerned with the same types of problems that a broad-based state or federal agency is concerned with. We do not face the problem of allocating resources among projects and modes. In short, we know what our short-, intermediate-, and long-term goals are, and every aspect of our planning and programming effort must be aimed at these goals. We constantly adjust, modify, and reshape individual actions to satisfy the present local and federal funding levels, political objectives, patronage demands, and changing conditions, but always with a view to our objectives. Despite the somewhat narrow planning and programming base described above, we and all other transit agencies are vitally concerned with the development of stable and rational programs at both state and federal levels. At the outset, I must state that it appears to me that the single greatest drawback to effective transportation programming is that it appears to perpetually proceed from a basis of inadequate funding. This is more than an annual appropriation statistic—it is a frame of mind. We see our chief transportation administrators conducting extensive needs studies in all modes and then recommending legislative action at woefully inadequate levels. It is no wonder that legislative action is inadequate. Part of our collective funding problem may be the result of excessive intermodal jealousy and competition. Individually, we are so concerned that some other mode may get too large a share that we undercut each other. Our first goal should and indeed must be a cooperative effort for more funding for all modes. Contrary to Schuler, I believe there are real advantages to an adequately funded total transportation trust fund. A trust fund with dedicated revenues greatly reduces the annual agony of the appropriation process. In addition, trust funding provides an assured level of future funding—hence, program continuity. Although we all sympathize with his cry for less red tape, I believe we are going to encounter more, not less. Energy shortages, environmental protection, railroad bank- ruptcies, and soaring operating deficits have been used as principal reasons for increased spending in transportation. Each, in turn, has led to legislative demands for more program analysis, performance evaluation, and follow up. A case in point is the 1975 transit act, which is a specific legislative mandate for a high and uniform level of reporting by transit operators. The resultant IJMTA guidelines go far beyond legislative intent and provide an unprecedented degree of program control over local efforts. Either state and local governments will adopt high-occupancy vehicle preference measures or they will not receive operating support. Although there is no question that some of these preference measures should be implemented (despite the local political difficulties involved), it is distasteful that our federal agencies would use operating funding to enforce compliance. I join Schuler in his concern over uncertain incremental funding. This single factor is our principal problem. We must, of necessity, be engaged in a perpetual juggling process to do the best we can with what we think may be available in planning our short- range work program and then in rejuggling when we find out what is available. The resultant drain on program management is unbelieveable, and our hope is that collec- tively we can work toward not only adequate funding levels but also the initiation of long- term contract authority. 41 DISCUSSION

W. M. Hi/hard, Florida Department of Transportation

In Florida, programming, work program financing, and budgeting are done by the Bureau of Program Development, Management and Scheduling, a small group that was formed in 1969 when the Florida State Road Department was reorganized into the Department of Transportation. This group is also responsible for managing the program implementation and scheduling the many projects in the transportation program. The performance of these activities by one organizational unit certainly creates its problems in terms of responsibility, work load, and demand on those involved in this work. How- ever, it does have the advantage of forcing financial coordination of all departmental activity and gives those who are engaged in this work a perspective that would be difficult to obtain elsewhere. Programming, from our point of view, is documenting the proposed accomplishments of the organization in some order that reflects a balance between needs and priorities and that considers the availability of finances, personnel, and time. The program of proposed accomplishments developed by this process should have a high probability of success if the resource assumptions are valid and do not change and if proper management and control techniques are employed. This work program (in Florida our Five- Year Construction Plan) serves as a focal point for all department activity. It is the formal statement of departmental objectives in terms of transportation output. Budget- ing is concerned with the near-term (1 year) operating financial plan, which is compatible with the multiyear program. Planning is concerned with determining the balance between needs and priorities before a program for implementation can be developed. Programming can be done without planning, planning can be done without programming, and both can be done with no relation between the two. The desirable relation, however, is one in which the program is developed in accordance with the long-range plan. We feel that we have made considerable progress in developing the proper interface between programming and planning in Florida in the last few years. Programming and program financing are not well understood by the citizen, the legislator, or many who are involved in program implementation. In the minds of many people, anything beyond the next year's budget cannot even be contemplated. Yet, few realize that in a normal federal-aid highway project, the time elapsed between initiation of the project and its opening to traffic may well average as many as 7 years. Legis- lators, when they do begin to understand transportation finance, are surprised to discover that their annual appropriation merely pays the bills for work already initiated in previous years and that as little as 25 percent of the funds appropriated for any 1 year can be associated with new work. Florida, like many other states, still operates on the annual appropriation, which, although appropriate for most state agencies, tends to perpetuate the "cigar-box" concept of finance in transportation programs. The mis- understandings and difficulties become worse when the operation occurs in a full cash- flow environment as it does in Florida. Citizens, of course, do not concern themselves with the complexities of finance but do see our work program and objectives in terms of when we expect to implement specific projects. Because citizens, in either their personal or business affairs, will base plans on what we propose to do, our success in programming accurately is essential. Of course, the programmer and financial planner at the state level are not in full control of the situation. Any discussion on transportation programming and finance must include comment about federal-aid programming, for in most states this constitutes the major part of the programming effort. Florida has, in recent years, been successful in anticipating changes in federal law and in building a work program that incorporated the necessary flexibility to take advantage of federal-aid opportunities. Success in federal-aid programming, however, especially in the last few years, is becoming more difficult to achieve. The 1973 highway act and the 1974 amendments contain some 50 categories of federal funding, of which Florida participates or hopes to participate in approximately half. The ability to transfer funds from one category to another is limited. As an example of the degree of specificity of highway legislation, 42 the 1974 act appropriated money for an improvement at a specific intersection in a specific city—certainly not what one considers to be national legislation. One of the major problems in Florida now is that, even with the 20-odd categories that we participate in, none permits us to apply the funds to what we consider to be our most critical needs: bridge rehabilitation and resurfacing of the primary road system. State funds, which in Florida come from the 4-cent gas tax passed in 1942, must be used for bridges and resurfacing as well as for operating costs, maintenance on the primary system, and any other costs on non-federal-aid work. Another problem facing the state government is the lack of continuity in federal programs. For example, TOPICS, in our opinion an excellent transportation program, was abolished at about the time the states had finally designed projects and were ready to obligate the funds. The lack of continuity exists not just in funding but in systems definition. The Functional Classification Study was a step toward eliminating the hodge- podge now existing in federal and state systems. The intent was that eventually funding would be compatible with the systems defined. This has not been the case, and we find ourselves now abandoning logical system definitions to make proposed projects eligible for some federal-aid fund category that exists at the time the projeát is to go to contract. The urban system is a good example. Although many of the problems are built into the law itself, in many cases administrative interpretation and resulting procedures for implementation create other difficulties. The lack of coordination at the federal level is evident when we have developed a construction plan that proposes to use urban system funds on highway projects while at the same time UMTA is advising local areas that the same dollars are available for various transit projects. From the programmer's standpoint, it makes little difference whether the funds will be used for highways or transit, except that obviously they can only be obligated once. We do have a responsibility for total transportation in our department in Florida, and we do have an aggressive transit program. The problem in spending significant dollars in transit in the early years is that transit needs at this point are in the front-end stages of planning and preliminary engineering. Later on, as we get into the construction phases, the dollar needs become even greater than the amount that Congress has appropriated and much greater than any amount the states could fund with present revenue sources. In the meantime, while this front-end work is being done, the money was planned for use on highway projects that had been proposed and were unfunded when the primary and secondary appropriations were converted to rural systems only. Again, if the output project requires 7 years from beginning to end, we must have program coordination and stability for at least that time frame. Another related problem is those programs that are unpopular with the administration and for one reason or another never seem to get to the point where money can be obligated. In addition to the problem of law and its administrative interpretation and implementation is the problem created by the Executive Branch through its freezes and thaws of obligating authority—otherwise known as the impoundment process. Florida has never really suffered that much from impoundment. We have managed to stay ahead of federal programs such that we always were able to take advantage of the releases of obligating authority. However, staying in a position to do this, and actually doing it, does make it difficult to manage a smooth even flow of contract lettings. The ups and downs that result from being ahead on federal programs are certainly disruptive to department forces and the construction industry. In the past, we accepted this on the theory that the President was exercising his responsibility to control the economy through these measures. Recent events have caused us to wonder if this sort of economic control really brings about its desired result. The recent release is an example. Although we have production ready to go and could let contracts, the necessary state matching funds are not available. it is ironic that while the states felt the impact of the energy crisis and the resulting drop in revenue early in 1974, the federal-aid programs, because they are managed on an encumbrance basis, have not felt the impact and are adding to the burden of the states because of increased matching requirements. The continued and increasing level of federal-aid apportionment has accelerated the time when states can no longer 43 pursue full federal-aid programs, provide the necessary matching money, and carry out their responsibilities that must be funded with state money alone. In Florida we have reached that point today. At this time, Florida is unable to capture any additional federal aid because of the matching problem. Apparently, from information we have been able to gather, there are at least 30 other states in a similar situation. It is hard to see how Congress can talk about a 5-, 10-, or 20-cent gas tax increase and make no mention of the use of at least part of this to solve the problem in these 30 states, particularly when transportation programs require no additional federal or state employees for completion and these programs help employment by providing approximately 1,400 jobs for every $20 million monthly contract letting. The energy crisis, with its resulting drop in anticipated revenues, and inflation in transportation construction (which in Florida was 45 percent in 1 year) have really brought to light and made more acute the problems in transportation funding, which had existed for some time and eventually would have surfaced anyway. We are at a point now where Congress or our state legislature must find solutions to these problems or suffer cutbacks in the level of transportation service to which citizens have become accustomed. The impacts of the energy crisis were not all bad. For one thing, it certainly forced us to improve our cash forecasting process. In Florida we have even had to go on a quarterly commitment authority of 100 percent state funds. At these quarterly commitment authority sessions, all potential projects are analyzed and weighed to determine those that should be pursued. This kind of exercise really forces us to analyze our priorities. Discussions of modal trade-offs and balanced programs become more difficult when you reach the point of deciding whether the last $200,000 of quarterly commitment authority should be used to construct a bus shelter in Jacksonville, repair a bridge that is in critical condition in the Keys, or match a federal-aid reconstruction project. Of course, these problems would not be so acute if federal aid could be applied to these programs. Some flexibility in the specifications followed for federal-aid projects would permit the states to make better use of the limited funds that are available. The California approach, which considers availability of funds in the establishing of the project concept and even in design, is a step in the direction of making better use of available funds. Although there is not unanimous agreement that this is the proper approach, it is evident that programming and financial planning are not the same in economic hard times as when money is plentiful. What is on the horizon for programmers and financial planners is hard to predict. An examination of the role played by federal, state, and local governments in transportation financing and implementation appears to be appropriate. Should the federal government be involved in every transportation program, or should federal efforts be restricted to those programs with national significance such as the Interstate Highway System? Some think that a program should be funded, administered, and executed at the lowest level of government, where the expertise and resources exist or could exist to do it. This principle, if followed, would probably mean that some transportation programs now considered federal would fall to the states, and some programs now administered by the state would be passed on to local governments. It does appear that many programs now administered by the federal government could be performed with greater success by the states or local areas. Some federal programs, which are being carried out uniformly in all of the 50 states, could reasonably be classified as "ex- periments" and would probably have a greater probability of at least partial success if carried out individually in 50 different programs as devised by the individual states. This is particularly true in those programs that have shown no evidence of success and are even at odds with state needs and desires. There probably should be a modification in the way funds are now distributed to the states. Florida, which according to FHWA records is the second greatest donor state, may have been content to assume this role in a time when money was needed to construct the Interstate Highway System in the central and western states, which could not fund these projects on the basis of revenues collected locally. Except for the Interstate Sys- tem, however, there appears to be no logical reason why Florida should contribute to 44 the improvement of any other state's transportation system. A distribution procedure that does this on the assumption of achieving national uniformity of systems would seem to reward with larger apportionments those states that had difficulty in program implementation. In Florida we are experiencing continued interest by our state legislature in the matter of transportation programming and funding. Eventually we may have a state system of apportionments and obligating authority releases. Perhaps much of this will pass from the federal government to the state governments and eventually to the local governments. Pricing and Investment in Transportation Facilities

George W. Hilton, University of California, Los A ngeles The principal problem confronting Congress as it develops a public program is to ensure that the program does not treat the symptoms of inept pricing of existing facilities and the inappropriate economic organization of the private industry that uses the public facilities. These 2 conditions give rise to a political demand for excessive investment to deal with peak loads. I shall present two principal examples: The first, the simpler and less controversial, is airports. The argument I shall make is essentially that made by Eckert (1). Air- ports are customarily owned by municipalities or county govermnents and administered by boards or authorities that do not seek to maximize net receipts. Because they are nonprofit institutions, the civil servants or boards who run them are in no position to capture the benefits of appropriate organization of the airports. Airport authorities, at least in large cities, are entrusted with allocating something that is quite scarce and valuable: the use of airport runways. At the largest cities the value of airport runways (in terms of opportunity cost, which is the alternative use of the runway) may be as great as $4,000 per minute. One might reasonably expect that airport authorities would begin their considerations with the pricing of runways. They typically do not do so, however. Until 1969 relatively little attention was paid to what in fact they did, but that year Professor Michael Levine of the University of Southern California Law School produced an article that conceptualized the behavior of airport authorities. Such authorities typically begin by auctioning off monopoly rights to auxiliary services in the airports—newsstands, restaurants, bars, parking concessions, the right to rent automobiles, and so on. This ensures that the airport authority will capture such monopoly gain as is generated in the exclusive rights to provide such services. Having done that, the airport authority customarily proceeds to set the price of runways in an effort to have the airport break even. As I have said, the airport authorities are not expected to earn a profit. In some of the smaller airports, this results in the runways being provided at no price at all. At the larger airports this usually results in the airport authority engaging in a process of average-cost pricing, trying to break even by allocating the cost of the runway, most frequently levied on the basis of the weight of the aircraft. This means that the fee for private planes may be $5, $10, or $ 2 5 andthe fee for a large commercial plane may be several hundred dollars. These fees are typically undifferentiated by hour of use

45 46 of the runway. The consequences of this should be easily predictable. The average level of charge for the use of the runway is so low that the fee does not provide the usual function of a price of encouraging economy of an existing supply. In particular, the fee is so low for general aviation aircraft that a major airport may prove to be the cheapest place to land a light plane. Even for a large commercial plane, the fee is so low relative to the total cost of operation as to amount to a negligible discouragement. For example, in the late 1960s it cost a major airline approximately $5,500 to fly a 707 from Los Angeles to New York and then only $75 to land at Kennedy Airport. The airline was rational, then, in acting as if that fee did not exist. On the other hand, the actual cost (again in the economist's definition of cost as the sacrificed alternative) of using a runway might be exceedingly high. Park and Carlin, 2 Rand Corporation economists, estimated that at the major facilities such as Kennedy Airport the opportunity cost of landing a 707 at peak hour was in the range of $1,800 to $2,000. Under these circumstances one gets what could easily be predicted by analogy to other forms of nonpricing rationing. In the case of airplanes, it is the most expensive form of queuing in society. The queuing takes, on the one hand, the form of a line of planes waiting to take off and burning well over $25 worth of fuel per minute and a much more expensive form, on the other hand, of planes flying around in stacks waiting for their turn to land. In such a queue a full 747, including the value of the passengers' time, could easily turn in queuing costs of more than $1,500 an hour. The airlines deal with allocation of runway space as one would expect. They typically get together and allot to one another slots for taking off and landing. This means that the runway does not go to its highest valued use as it would if, for example, the right to use a runway for 30 seconds were auctioned off. There is the further problem that the airlines have the general characteristic of relatively low load factors. The Civil Aeronautics Board creates an underuse of resources, which in this instance man- ifests itself in load factors of planes of only about 50 percent. The airlines fly planes too frequently partly because this is a form of service rivalry and partly because the low level of the user charges at airports does not discourage them from doing so. The excess demand for runways, which this organization of airports and of airlines tends to produce, inevitably gives rise to a political demand for building additional airports. However, the proliferation of airports involves a problem that the situation at Wash- ington, D.C., exemplifies perfectly. National Airport is located near downtown Wash- ington and approximately at the center of the metropolitan area. It encountered the phenomena that I have just been describing: National was thought to have an excessive rate of utilization and therefore generated a political demand for the building of a second airport. National Airport was and is owned by the federal government. The federal government therefore was the entity that built the second airport—Dulles Airport in northern Virginia, some 26 miles from downtown Washington. National Airport is more convenient to the vast majority of residents of the Washington area and to virtually everyone who makes business trips in and out of Washington. The airlines charge the same fees both to Dulles and to National Airport. Because the great majority of passengers prefer to use National, the Federal Aviation Administration has to find some method of allocating passengers between National and Dulles. Rather than engage in a form of price rationing, it requires that 4-engine jets use Dulles, that planes going farther than approximately Kansas City before their first stop use Dulles Airport. This deals imperfectly with the problem because most passengers going longer distances have the option of transferring at Chicago, St. Louis, Memphis, or other points to a plane going to their final destination. Accordingly, Dulles is an underused facility and National Airport is an overused facility. Thus, no matter how many airports one builds, the problem tends to survive because the demand for building the redundant airport is itself a symptom of what is wrong with the industry. What then would be the solution to the problem? First, a change should be made in the method of allocating runways. There is no reason why airports ought to be in the public sector of the economy. This is not a facility that the private sector finds impossible to price. Specialized firms, or airlines, or groups of airlines could run airports as firms ran railroad stations, charging 47

one another and nonowner users for the services of the airport. Short of that, however, the airport authorities could be instructed to price the runways so as to eliminate the queuing situations. They might auction off the rights to use the runways at 30-second intervals. The price would then be higher in peak hours than in off hours. The use of the runways during times of peak demand by people who have relatively high time values would be priced according to the highest value. Such pricing would get rid of most general aviation from major airports though by no means all. Some people flying general aviation planes have high time values, for example, those flying desperately sick relatives into major cities to get them to the hospital to save their lives, and would pay peak-hour fees. Second, the airline industry ought to be "decartelized" by abolition of the Civil Aero- nautics Board. The industry would then be an ordinarily competitive one and would reflect the varying user charges at varying hours of the day in differential fares. It would cost more to fly at 5:30 p.m. than at 2:30 p.m. and more at 9:00 a.m. than at 11:00 a.m. Accordingly, a large number of people who have the discretion of flying at off hours would do so to take advantage of the lower fares. These changes would render the existing supply of airports adequate for several decades in the future. The present policy as embodied in the establishment of a trust fund for the building of airports in 1970 is likely to cause a proliferation in major cities of redundant airports of the character of Dulles. Alternatively, it gives rise to a great deal of acrimony at the local level as people, out of consideration for the environment or for other reasons, oppose the building of airports. The second example is the building of roads, especially freeways in urban areas, and rail transit facilities in major cities and the effort to revive the transit industry. Roads, like airport runways, are given away at prices so low that the users act as if the roads were free. The prices that governments charge for roads are excises on gasoline levied at the pump. This method of pricing.is used for only one reason: It is an economical tax to collect. Gasoline is the only input into automotive transportation that is regularly metered, and thus the marginal cost of measuring the tax at that point is the lowest possible. Unfortunately, this method of pricing roads has nothing else to be said for it. The excise is so low relative to the total cost of operating an automobile that it does not serve as a price should to encourage economy of the existing resource. Especially under the federal Highway Trust Fund established in 1956 and the state counterparts, the user charges on roads, even though they do not discourage use of present roads, are earmarked for the building of further roads. This situation is parallel on all grounds to that of the airports. A further objection to this form of road pricing is that it does not appropriately indicate to governments what additional facilities are demanded. Once again, this method of pricing creates queuing in rush hours: in this instance, queuing of automobiles to get into central business districts of major cities in the morning and to get out in the evening. This gives society the grossly erroneous impression that there is a demand for further radial facilities to and from central business districts. Actually, the demand for trips in and out of central business districts is relatively static. In 1960 some 11 percent of all trips in the Chicago metropolitan area were in and out of the Loop. This is now down to 8 percent and is expected to be down to 5 percent by 1980. The growth in trips in metropolitan areas is mainly between suburbs—the sort of trip that is handled by circumferential roads of the character of Mass-128 and 1-49 5 around Boston, the beltways around Baltimore and Washington, and the San Diego freeway in Los Angeles. Such roads handle not only the growing trips between suburbs but also people who have no business in the metropolitan area at all, who are simply going around the city incidental to a trip between other cities, and who, in absence of the circumferential road, would drive through the interchanges of the radial freeways in the central business district. The queuing on radial freeways and other radial routes in rush hours as a result of the nonprice rationing of roads causes the public to line up into political camps advocat- ing building additional freeways on radial routes or, alternatively, rail transit systems that are inevitably in a radial pattern. As transit systems are now organized, there is inadequate demand even for bus operation except on radial routes in most cities, and there is demand adequate to justify rail service only on radial routes in all cities. 48

Transit, no less than the airlines, is an inappropriately organized industry. Transit is provided as a series of monopolies operating mainly in radial patterns, but essentially entirely on linear routes or specified routes in which the vehicles, mainly buses, operate on announced schedules. The consequence is that in virtually all cities only radial routes from central business districts are profitable. Transit enterprises hope that such routes will cross subsidize other routes, though this becomes increasingly unlikely over time. The demand for the radial trip on public transit has declined steadily. The service on buses is similar to service on the streetcars: stops at every block in a vehicle that has a 40- to 50-passenger capacity and travels approximately 10 mph. The expenditure in time to travel on such a vehicle is so great that, as their incomes rise, people tend to turn away from such vehicles and toward private automobiles. Accordingly, transit has been one of America's most conspicuous declining industries. A further consequence of this organization of transit is that the industry is overly capital intensive. The high level of wages in the transit monopolies causes them to choose a relatively large vehicle—a diesel bus having 40 or 50 seats—for the urban collection and distribution function. For line-haul functions for longer distances, the industry frequently—though not always—uses rail vehicles, which usually travel at 18 to 35 mph. Such vehicles have the indisputable advantage that they have private rights- of-way as rapid transit lines and thus do not get caught in the queues created by the nonprice rationing of roads. This, briefly stated, is the problem to which the Urban Mass Transportation Assis- tance Program was directed. The program had its inception in 1961, has been separately funded since 1964, and has been a major division of the Department of Trans- portation since 1968. Until recentiy this program was limited to making capital grants to transit systems for the building of rail lines, for the purchase of rail vehicles, for the replacement of buses, and for a series of rather markedly unsuccessful demonstration projects. Alout two-thirds of its funds have gone into the building of rail systems. Some 85 percent of the funds go into capital grants of all sorts. Most obviously, it tends to make more capital intensive an industry that has an economic organization that already tends to make it overly capital intensive. During most of the program's history, it has given capital grants in a 2 to 1 ratio of federal to local funds. This means that the capital cost of buses, rail vehicles, and rail systems has, in general, been reduced to a third of what it would otherwise have been. More recently, 4 to 1 grants have been permitted. Thus, the capital cost is reduced to approximately a fifth of what it would otherwise be. With respect to buses, this gives an incentive to substitute depreciation for maintenance and shortens the optimal life ex- pectancy of buses by about 50 percent. The capital grants are similarly an incentive to build rail systems in major cities. We now have a considerable body of knowledge to enable us to draw conclusions about the consequences of the imposition of a rail line. The experience of UMTA-financed lines in Chicago, Cleveland, and Boston has been relatively consistent. They have at- tracted 80 percent or more of their passengers from preexisting public transportation and usually 8 to 12 percent of their passengers from automobiles. The rest are typically people who did not make the trip previously. The superiority of the services of rail systems to bus lines is usually enough to divert about the equivalent of a 6-month to a 1-year increase in the number of vehicles. This, in turn, is too small relative to the daily variance in the number of vehicles to be perceived. For example, the building of the Quincy line of the Massachussets Bay Transportation Authority is thought to have diverted about 900 vehicles a day from the radial Southeast Expressway to the Boston central business district. But this expressway handles 80,000 to 120,000 vehicles per day normally. Freeways of this character usually have a traffic increase of 4 percent per year or so, and thus the diversion is imperceptible relative either to the variance or to the growth. The early experience of the Bay Area Rapid Transit in San Francisco appears to be consistent with this experience in other cities. Reportedly, some 70 percent of its passengers are former passengers of preexisting bus lines, and the diversion of motorists is imperceptible relative to the entire number that use the San Francisco Bay Bridge. The system cost approximately $1.6 billion 49

and is now expected to lose approximately $20 million per year. The completion of one large system and the publicity that its experience will inevitably receive will probably begin to dissipate the enthusiasm for building such systems elsewhere in the United States. The same line-haul function can be served by operation of existing diesel buses on reserved lanes of freeways as is done on the Shirley Highway in Washington for less than 20 percent of the investment. A simple system of admitting automobiles to freeways by traffic lights at on-ramps at a rate that will maintain a 50- or 55-mph freeway speed and of admitting buses without their queuing for those traffic lights will provide as many external benefits as or more than the building of rail systems for less than 2 percent of the investment of building rail systems. Making the transit industry more capital intensive, as the Urban Mass Transporta- tion Assistance Program does, strengthens the union in the field by adding to the co- operant capital that the union members operate, but the program strengthens the union in 2 other respects. Section 13c of UMTA's statutory authority requires that a public body, in order to receive an UMTA grant, must secure the agreement of its union to the proposed investment or demonstration project. This ensures that the capital in- fused into the industry will be used in complementarity to the union members and not in substitution for them. The agreement also gives the union a bargaining ploy to secure additional benefits. Fnally, funds in the program may be used for conversion of private transit enterprises to public. This, too, strengthens the union, for it places the enterprise in the hands of a nonmaximizing public authority similar to an airport authority, which does not have the incentive to minimize costs that a private enterprise has. The experience of conversion to public ownership has in general been that it has slowed the rate of decline of output, has slowed the rate of increase in fares, but has greatly increased the costs of operation, especially wages, of the entire enterprise. A further consequence of the program is that it creates a demand for preserving the Highway Trust Fund by making more people dependent on it. Mistakes of public policy typically generate their own political support by misallocating resources so as to make people dependent on continuation of the mistake for their income. The Highway Trust Fund is no exception to this. It has made a large number of people dependent on road building and collateral activities for their livelihoods. People who dislike road building, or who dislike the idea of earmarked taxes generally, usually conclude that the trust fund would be improved if some of the funds could be devoted to building of rail systems or to bus replacement. To a limited extent, they secured this in 1973. The consequence is that now the urban transit monopolies, the public bodies that administer them, and the unions in the transit industry have become political supporters of perpetuation of the trust fund, incidental to their advocacy of larger portions of the trust fund being allocated to their benefit. The Urban Mass Transportation Assistance Program has been a failure and must be expected to continue being a failure. It was designed to arrest the decline of the transit industry without changing the economic organization of that industry or changing the pricing of roads. Since what was wrong with the industry was a consequence of inappropriate economic organization and of the present method of pricing roads, the program could not have succeeded. Transit continued to decline until the increase in the price of gasoline in 1973. Since this made driving more expensive to drivers as nothing in the program could, transit showed for the first time a reversal in its secular decline. Similarly, the one success in the program has been running express buses on reserved lanes of freeways or otherwise speeding up buses on freeways relative to automobiles. This has succeeded in attracting drivers to the extent that other UMTA measures have not because it accomplishes one of the consequences of price rationing of roads: It speeds up buses relative to automobiles by getting them out of the queues that nonprice rationing of roads creates. Appropriate policy in this area would have been suasion of municipal governments to give up their urban transit monopolies, auction off the buses one by one, and allow them to be operated by owner-operators without restriction as to fares or routes or of entry or exit from the industry. Similarly, federal policy should be directed toward an effort to develop institutional arrangements for variable user charges on roads. Professor 50

William Vickrey of Columbia University proposes a system of meters on automobiles energized from impulses given out from wires embedded in the road. One would then be charged five times as much, perhaps, for driving in a rush hour as for driving in an off hour. This would have analogous consequences to the variable user charges that I proposed for airports. People would schedule in off hours trips they would otherwise have made in peak hours. They would avoid central business districts completely on trips that would not necessarily take them there. They would have an incentive to form car pools. At present, because roads are paid for by the value of one's time that one spends on them in the queues, it is a matter of indifference whether one is in one's own car or in somebody else's car. If a pecuniary fee were substituted for this, one could split the fee by filling up a car. Alternatively, one would have an incentive to use transit for rush-hour trips, and most important, in the long run, businesses and residences would move closer together. Some people would move into town and some businesses would move toward the suburbs for proximity to their labor forces. Such trends are already in evidence, but variable user charges on roads would serve to accelerate them. Therefore, such a policy would tend to be successful, whereas the policy of the Urban Mass Transportation Assistance Program is unsuccessful. The points I have made contain considerable generality though it is impossible for me to go deeply into other examples. In each of the examples I have given, the government has accepted the inappropriate organization of an industry and the inept pricing practices that have given rise to an excess demand and has behaved so as to worsen the problem. The experience ought to be properly cautionary, but economists are not notably an optimistic lot.

REFERENCES

R. D. Eckert. Airports and Congestion. American Enterprise Institute, 1972. N. Levine. Journal of Law and Economics, 1969. Program Development

J. Robert Harbison, Kentucky Department of Transportation Few would claim that there is anything really new in the highway or transportation programming field. Most of the fundamentals and the complex variations provided by computer techniques are still in use and still valuable. But we would scarcely call them new. What is new is a need to review the fundamental assumptions on which all our programming techniques have been based. We may not agree on the precise meaning of the word "programming." I will use a definition that was developed at a Highway Programming Workshop sponsored by the Highway Users Federation for Safety and Mobility in 1970: "Transportation programming can be defined as the orderly process by which transportation improvement projects are selected on a basis of factual need in accordance with established objectives and goals and includes allocation of resources, project scheduling, and program implementation." As we have seen economic growth advance this country to one of the most powerful and affluent nations in the world, we have also found that this growth disclosed a need for a technology and methodology to complement and serve such a society in transportation as in all its other activities. Transportation has been a key element in the growth and affluence we have enjoyed—both as a contributor and as a cost. Although planning, programming, and building a national transportation system have not been orderly processes, they somehow have met the demands of economic growth in this country. I suppose our success is all the more remarkable because not much of the urban transportation planning process was used during the earlier years of highway building in this country. The impact of that process, which was created by the 1962 Federal- aid Highway Act, on programming in urban areas was more than a palace revolution. I believe strongly in that process. I am convinced that every effort should be made to catalog transportation needs and establish priorities for dealing with them. Inven- tories of all kinds are essential tools for the executive-professional. These include exhaustive detail about existing facilities, sufficiency ratings, cost-benefit ratio calcu- lations, and functional classifications. But after all the statistics are gathered, sorted, and weighed, money is the controlling element, the key to the development process. With ample money, one can expand, accelerate, modify, meet emergencies (and inflation), and even get by with fewer detailed and comprehensive data and rely to some degree on knowledgeable

51 52

insight. But with limited funds, one must have flexibility, the essential ingredient in program development. We simply must prepare to move in any and every direction in today's circumstances. The amount of funding likely to be available for any transportation program is so unpredictable that any attempt to make long-range schedules is an exercise in futility. The involvement of the federal government in transportation seems to be shifting toward less federal control and more options at the state and local levels. I think that this is the right direction for a more efficient and effective transportation program. It raises a serious question about the role of the federal government in a continuing highway program. Perhaps leaving only the completion and maintenance of the Inter- state Highway System to the federal government would be in the public's best interest. I believe that the federal interest in rail, air, and waterways is stronger and more compelling. It seems to be needed to bring those modes to a more uniform level of service by providing adequate funding. Program development for urban public transit also requires federal support and oversight, but practical control of these programs and their priorities should be at the local level. The various states are best able to provide responsible program development in transportation because they have both a statewide and a regional focus on transportation needs and because they represent the strength of the governor and the legislature. Because of the tremendous diversity in geography, natural resources, rural and urban development, and social and economic conditions, state-level program development and determination of priorities should be the most responsive to citizens and their needs. Thus, we should have flexibility among the states. The same degree of flexibility does not exist when programs are imposed at the federal level. This has been dramatically demonstrated by the proliferation during the past 6 to 8 years of funding categories in the federal-aid highway program. They re- sulted from Washington's efforts to respond to the special interests of so many different transportation needs and to such a wide diversity of transportation problems: all the varieties of urban concentration, system adequacy, industrial development, topography, revenue sources, social customs, and political traditions in the 50 states and more than 30 different funding categories. Now the American Association of State Highway and Transportation Officials and the administration are recommending a drastic reduction in categories —perhaps to 4. High- way administrators generally welcome this proposal but I would prefer 2: the federal government responsible for the Interstate Highway System and state and local governments responsible for all other roads and streets. Of course, this would require that a comparable level of highway user-tax revenue remain in the state. Some may see this as bringing more instability and added uncertainty in program development, but I believe this would provide means of developing more responsive and economical highway programs. Most state transportation administrators and governors are frustrated by the 6 to 10 years required for a federal-aid highway project to go from planning to construction. In most cases, this period overruns one governor's administration and perhaps the administrations of several governors. The governor's influence on the transportation program is apt to be long-range at best. The professional or tecimician has the responsibility for collecting, analyzing, and arraying sound and appropriate data from which the administrator can develop a program within the guidelines and framework established by the state's goals and objectives. Programs that have flexibility and contain acceptable options are the only ones that have a chance to find acceptance in today's political and economic climate. Programs that can be broken down into incremental segments of demonstrable value are more than desirable; they are necessary. The long life of the federal-aid highway program has had much to do with institution- alizing the program development process. Twenty or 25 years ago, when federal aid became substantial, many departments began developing long-term improvement programs for the first time. The old ABC program rolled along and was joined by the Interstate Highway System program. Only in the past 6 or 7 years have things changed drastically. We have seen design and safety emphasized; standards reevaluated; re- 53

location assistance instituted; environmental, social, and economic impacts assessed and formalized; citizen participation encouraged; modal options explored and evaluated; an energy crisis; leveling off or declining revenues; and skyrocketing costs. Because of soaring costs, we have seen 5-year programs become 10-, 12-, or 15-year programs. No matter how streamlined the program procedure is, adjustments of time and cost estimates can hardly be made fast enough to keep pace with changing conditions. Scheduling in program development is crucial, and the environmental impact statement contains perhaps the most difficult elements for which to develop representative criteria. The ability to forecast project phase completions realistically— and cost changes—is the hallmark of a successful program. We have found that the relocation assistance program in some urban areas and in Appalachian corridors, environmental impact statements on major urban projects, and the urban planning clearing house procedures almost defy scheduling. Citizen involvement in projects is unpredictable as to degree and extent. After 25 years, having participated in many project meetings and hearings, I am still surprised at some of the issues that become controversial and time consuming. Every reasonable effort must be made to bring the interested and affected public into the planning process. Because we cannot control these time elements, we must have program flexibility. Development of a multimodal statewide transportation program that relates relative priorities and needs among the different modes would be ideal, but it is practical only if flexibility exists. Can such a program come about? I am not aware of any place where it has, but some comprehensive urban transportation plans tend to approach multimodal evaluation of needs and priorities and the idea of the single transportation trust fund supports this concept. All transportation modes and related programs have undergone substantial though seldom coordinated change in the last few years. The change has affected their economic health, their operating policies, their funding, and, most of all, their future plans.

DISCUSSION

Thomas F. Humphrey, Massachusetts Department of Public Works

The preceding observations on program development and the description of the experiences and problems are familiar to all who have been involved with the programming of transportation improvements. In Massachusetts we have recently embarked on what we feel is a new approach to program development. This is a discussion of what led us to take that approach. In trying to establish procedures for implementing new federal rules and regulations (e.g., the Action Plan, multimodal planning, citizen participation, environmental analysis), we soon found that the traditional programming techniques did not work as they did in the more narrowly defined highway-building process of the 1950s and 1960s. The traditional programming process was driven by federal funding. When environmental considerations and citizen participation were not issues, when the engineer's words were taken as Gospel, and when public transportation was not taken seriously so that there was no real competition for transportation funds, then the churning out of projects seemed to work satisfactorily. The supply of funds seemed to be endless, and the need for the capital projects (based on simplistic models) was unquestioned by the powerful private and public interests or by the average citizen. Since all projects were "needed" and funding was no problem, secondary criteria, such as pressure from various groups, only acted as valves. Certain projects were speeded up; but, since there were no other factors to slow down any projects, things moved along nicely. The freeway revolt of the 1960s ended the effortless mass production of highway 54 transport facilities. The self-fulfilling prophecy that new roads would generate more traffic began to be recognized. New evaluation criteria began to be considered in the decision of whether to build a new road. The environmental and social impacts on the region and local communities became significant in decision making. New federal and state rules and regulations ensured that these issues be taken seriously. The need for openness in decision making was seen; citizen participation became an issue. Public transportation began to develop support and to compete for federal funding. Even within the highway program, funds were inadequate to build all the projects that had been planned as part of the comprehensive transportation planning process. Because of habit and lack of a truly effective planning and programming process, new projects continued to be proposed. There was no real way to determine project need (except to say that all projects were needed because the simplistic models showed—in many cases wrongly—that level of service would be improved), and there was no feedback between what could be built in terms of realistic funding constraints and negative impacts of projects and what state highway departments desired to be built. But no longer did the project shoot through the "pipeline" frictionlessly as if through a pneumatic tube. The factors discussed above caused projects to be delayed, and the pipeline became clogged with too many projects. Instead of making decisions about which projects to pursue, the agency remained passive, and de facto decisions just "happened." The clogging of the pipeline and the pressure applied by various groups led to further problems—the "cycle of promises":

Constituent asks politician for project; Politician asks the transportation or highway agency for the project; Agency agrees to study it; Years pass; and Step 1 is repeated.

The results of this cycle of promises are bad for the politician and bad for the agency. The politician cannot deliver on a promise, and constituents become angry. The agency cannot produce. In some cases, the project actually is studied, and the early results show that the project is not feasible. However, work is continued because of pressure from the politician, good money is thrown after bad, and the project is stopped only after it is well into design. This wastes money and time, harms morale in the agency, reduces the agency's credibility, and prevents other more desirable and realistic projects from being studied and built. Many times the politician will be happy with a "no" answer if it is arrived at in an open way. But because of the web of politics among the governor, agency heads, and the legislature and the process of approving budgets and appropriations, the agency perceives the need to deliver promises to legislators and other special interests. This reinforces—and is reinforced by—the lack of a visible decision-making process, which makes it difficult for an agency head to make a firm "no" decision early in the life- cycle of a project. This brings us to the frustrations of the planner. Such an institutional framework in which to make programming decisions really means there is a lack of a planning process. The need for a real, effective planning process was perceived in 1962, when the urban planning process was created, but this process has gone through many false starts. At first, no one knew how to implement the "cooperative" part [now we have the institutions of the regional planning agency (RPA) and transportation policy advisory groups (TPAG) in Massachusetts]. Instead, the focus was on "comprehensive," and planners established a glamorous technology (numbers, computers) that would match the awesomeness of the final products—the expressways. And, in fact, the studies based on "sophisticated" technique did rival the awesomeness of the final construction in terms of cost and length of time. After all the money and techniques and time were spent, the plans were not used anyway for program decisions. In the pursuit of scientific objectivity, the plans missed the obvious; they overlooked the real world of funding constraints, and they did not tie into the political process that formulates and constrains policy decisions. After all these years planning still remains a murky area, and 55 projects still get lost in the never-never land of long-range plans. The definition of "project need" is complex, for it involves many (sometimes conflicting) objectives and multiple impacts on different groups of people with different values. We have decided that the pursuit of glamorous, objective models is a red herring. The computer-oriented transportation planning study process has its own dynamics of unreality, self-perpetuation, and oversimplification. The consensus of the TRB Conference on Statewide Transportation Planning Issues was that another type of modeling and analysis process was needed: a sketch-planning analysis, using off- the-shelf models, and quick and efficient analyses to allow planners to respond quickly to a variety of issues. All these lessons bring us, finally, to the approach that we have been following for the past year or so in Massachusetts. We are using the program development process to bring the planning process down to earth, to keep planning in touch with reality. The basis of the program development process is the establishment of project priorities. This process ties together all the elements of the planning process. Priorities are based on a variety of factors: project need (from judgment of various impacts), environmental problems, community support, RPA and TPAG recommendations, and funding and scheduling constraints. Hence, transportation improvements are based on a number of factors, including the availability of funds for a multiyear period. This priority setting and program development are embedded in the planning process because it is through the planning activities that the preliminary information on which to base priority decisions is developed (e.g., estimation of available funding, regional and corridor planning study reports, public discussion in the TPAGs and RPAs). More important, a firm decision-making structure is embedded in the institutional framework by organizing the first step in the process of program development and controlling the organization of project proposals in the systems planning phase through the TPAGs and RPAs. In this way, the demands of the political process (e.g., legislator and constituent requests) are met by being channeled into the open process of the TPAGs. This is justified because we recognize the transportation planning process as a political process, not simply a technical process. The paradox of the difficulty of precisely defining project need is resolved by understanding the policy-oriented nature of the planning and programming process. Furthermore, the process is decentralized by involving the RPAs and TPAGs in the formulation of regional project priorities that are balanced by statewide policy. Through all these means, the evasive long-range program dissolves into a decision tree of flexible strategies, and the short-range program represents the current view of the availability of funds expected for the next 5 years and matched with a schedule for the projects to be developed. Such a short-range program is monitored continually and reviewed annually. Clearly, a necessary part of this short-range program development process is public discussion of all projects. To achieve this, we have been working on a project information system. This is a means of collecting, maintaining, and distributing information about the projects that the state is planning, developing, and designing and presenting it to the public in an understandable form. Such a system is necessary because there is an increasing amount of information being generated concerning each project, and the number of individuals who are directly concerned with the decisions being made has expanded greatly. In addition to informing the general public, the system is used for communications within the agency, coordination with other government agencies, and the data base for program development decisions and monitoring progress. The types of information covered are location, type of work, economic and noneco- nomic benefits and costs and user and nonuser benefits and costs (including community, social, and environmental impacts), eligibility for funding programs, time and personnel required for project activities (expected schedule), attitudes of interested parties, RPA and TPAG positions, and current status of proposed projects. The Massachusetts approach to program development is the key to a realistic planning process, which obviates both the frustrations of the planner and the cycle of promises. I would like to disagree with 2 points made by Pikarsky. First, he stated 56 that he felt planning and programming functions should be separate, that programming should be a check on planning. Second, he said that planning should take place in an unconstrained environment, i.e., without consideration, necessarily, to available resources. My position is that the purpose of planning is to arrive at a set of priorities and to program improvements on the basis of available resources. In an earlier paper, Nelson commented that continuous feedback between planning, programming, and budgeting is essential. I agree. If planning is conducted in an unconstrained environment, then the plans developed will be totally unrealistic. That was the problem with the urban studies in the 1960s. We cannot afford to repeat that mistake.

DISCUSSION

Thomas P. Messier, Federal Aviation Administration

I would like to review the administration's legislative proposal for the airport grant-in- aid program. I have been one of a number of people in FAA who have been involved during 2 years in developing this revised program. I will briefly review the principles of the bill, its key features, my prognosis regarding its passage, and what I think is a significant lesson to learn regarding its development from a long-range planning point of view. Basically there are 4 principles.

To increase state and local decision flexibility. We had received a great deal of feedback from those involved in the Airport Development Aid Program regarding the degree of federal influence on investment decisions. Therefore, one of our goals was to reduce the federal influence in those areas where we felt that local and state authorities could better make decisions that more immediately reflected local priorities. To reduce federal control and cut red tape. Basically there are 105 steps between the time an airport grant project is initiated and the time the money is received. This often takes 2 years; our proposal will drastically reduce that time. To provide long-term predictable funding. Under the existing act it appears as though funding consistency exists, but in reality it does not. There are no guarantees that a sponsor will get grant money even based on the apportionment formula in the present act. Our proposal corrects this. To focus federal development on what we consider to be critical national needs; that is, to make more effective use of resources at the federal level.

Let me review the key features of the bill. We are proposing a total program level of $350 million per year for a 5-year period, a 9 percent increase over present legislative levels. The program is divided into 3 categories.

We have allocated about $250 million for air carrier development based on a formula keyed to aircraft departures and principally focused on development and master planning at air carrier airports at about 600 locations. A discretionary fund of about $50 million is reserved for the use of the Secretary of Transportation for the development of critical needs at air carrier airports and development of general aviation airports. Also included are funds for airport system planning and a small amount for test and development of airport pavements. We have allocated $50 million to be funneled through the states for the development of general aviation airports. The bill provides for a takeover by the states at the end of 3 years so that by fiscal year 1979 the states will fully assume responsibility for the development of the general aviation airports in this country.

There will be a direct pass through of funds to airport sponsors for air carrier air- 57 port development. Each of these airports will receive at least $100,000 per year on a guaranteed basis; large air carrier airports will receive as much as but no more than $5 million. Without this restriction, some of the larger airports like O'Hare could receive $12 to 14 million under the formula. This approach, therefore, provides predictable long-term funding for these airports. In addition, it places almost total responsibility for developmental decisions with local people. It cuts red tape because we will no longer have the 105-step horror story for airport grant processing. Further, federal control will be reduced to requiring that such development adhere to federal standards from an engineering standpoint. Beyond that, local people will be responsible for making the actual investment decisions. The discretionary fund retained at the federal level starts at about $50 million and tapers off to about $30 million at the end of 5 years; $10 million is to be used for airport system planning. A variation that many people have been concerned about in aviation heretofore is taken care of in that we will provide for funding of continual planning. The discretionary funds will be focused principally on safety and efficiency items. In the general aviation fund, the distribution will be made 75 percent on area and population and 25 percent on state-based aircraft. We feel that is a better formula than that which currently exists in the act. Without question, phasing general aviation airport development back to the states is an obvious expression of the decreased federal interest in the development of these kinds of airports. In terms of overall matching funds, our proposal is to require a 75-25 split on all projects. In effect, this brings the $350 million up to about $470 million for airport development by providing for 25 percent local-state participation. We will require master planning at the local level; that is, the airport sponsors will be required to develop master plans. However, the funds for planning will come out of the development money. Metropolitan, regional, and statewide system planning is provided for by the $10 million discretionary money. In addition, we will require that air carrier airport sponsors submit a 3-year capital improvement program within 1 year after passage of the bill. The former National Airport System Plan will no longer exist. However, we will publish annually a report that will be by and large a summary of the 3-year capital improvement programs at air carrier airports. We have provided for 2 new eligible items. First, we will allow funding of the public- use portions of the terminal, that is, any facilities used for the passage of people and goods in the terminal area. Second, we have identified the purchase of land for environmental purposes as an eligible item that, when taken together with our engine retrofit proposal, will provide noise relief at many large airports. The whole theme of our legislative proposal is in large measure aimed at decreased federal interest and a return to the local level of decision-making responsibility and authority. One issue that is still open is our proposal to delegate the responsibility for development of the general aviation airport system to the states. There appears to be a difference in view between the executive and legislative branches regarding what is in the federal interest. Congress may take the position that a federal interest does exist in general aviation airport development and thus such funding should be supported at the federal level. One lesson that I learned from working on this proposal is when to use a tactical rather than a strategic approach to solve a problem. The need to use a tactical approach stemmed from our inability to define the national airport system. There clearly exists an interdependent air traffic control system; when you disrupt the system in Chicago, it will back up the flow of traffic to London. However, I have no comparable analytical basis on which to place any credence that airport capacity investments at different locations are immediately intertwined. The analytical or philosophical foundation for the airport system simply does not exist, nor do we even find what I would consider a rational statement of goals for a national airport system. Although we have been urged to determine programmatic effectiveness of airport grants for a number of years by the Office of Management and Budget, I think by and large we have been unable to do so. People, therefore, reached the logical conclusion at the policy level that perhaps there really was no national system of any significance 58 and that we did not know what we were about after all in this large program. Certainly we could not define the interrelation of airport development in economic or analytical terms across various airport types. So there was a significant lack of data, a significant lack of analysis, and a significant lack of sound thinking behind what constitutes the national airport system. Because of this, we were forced into a tactical kind of approach to the development of the bill. However, this approach leaves me with a lot of serious questions. I am not at all sure that what we have defined as the federal interest sets us on the proper path. I am enough of a bureaucrat to realize that this is not the last word in the development of the national airport system. I think we have to define very rigidly what the airport system is and develop the data and analytical foundation that will then serve to provide whatever policy changes we might make later. In that way, our approach to airport system development can be substantively rather than tactically based. Decision Making

Alan Altshuler, Massachusetts Institute of Technology Why is it that the governmental process seems to act so frequently in such perverse ways, at least from the standpoint of an economist who is concerned about economic rationality and efficiency? In an article on the ecology of micromotives, Thomas Shilling, an economist at Harvard, described the way in which governmental systems in the pursuit of certain overarching public interest objectives often create an ecolog- ical system within which individuals making their own specific decisions act in ways contrary to the public interest. He stated that the greatest challenge to those who would devise governmental systems is to devise systems that not only are conducive to the public interest in the overall but create an ecology in which the micromotives lead individuals by their actions to serve the public interest. The particular example he gave was the system of traffic signals whereby there are certain public objectives of sorting out traffic, achieving safety, and getting people to stop and be courteous to one another at intersections. But unless there are some rules, one cannot do it; and the system of traffic controls is one in which the micromotives lead one to obey the rules. One rule is that you drive on the right side of the street, and if you decide to drive on the left side of the street you are likely to pay a high price for that choice. If there is a red signal and you choose to go through it even if there is no police officer, you are likely to pay a high price if another car runs into you. So, the self-interest of the individuals regulated tends to reinforce and bring about self- enforcement of the system. I think that we tend to place more and more of a burden on government despite substantial evidence that government is an enemy of efficiency. There are a number of reasons why we place this burden on government, and an exploration of some of them may be of value in the design of systems in which the micromotives of decision makers perhaps lead them to do this somewhat less. I will discuss three of these reasons. First, we are increasingly aware of the complex relations among things, and we are increasingly and exceedingly ambitious to deal with these relations in a comprehensive fashion. We have a remarkable thrust, particularly in transportation, toward a more and more overarching comprehensive perspective that all of the side effects, all of the modes, all of the values potentially impacted by transportation policy may be not only considered but controlled in the system and that only a general body like government has jurisdiction to bring so many values under control.

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Second, as the government rises in dealing with more and more of these values, it increasingly bears a significant part of the blame for each new crisis. If the northeast rails are in trouble, we find that regulatory policy, highway-building policy, and a variety of other policies by which government discriminated against the railroads in the twentieth century are largely responsible for that crisis. Inasmuch as politicians almost never have the heart to reverse or undo an old program, they try to solve problems by adding new programs, for example, nationalizing the northeast rail system. Indeed by continuing most of the old policies in existence, they are today guaranteeing that the entire American railroad system will have to be brought within the northeast rail framework within the next 15 to 20 years. Even the apparently profitable railroads are today profitable because, with very few exceptions around the country, they are eating up their capital in one fashion or another. The process of the transit fiscal crisis, which started in the Northeast in a relatively few big cities and gradually spread to the entire country, is the same process we are deeply into in the rail situation today. Similarly, when we have a transit problem, we can look back into the history of transit and see a whole series of government actions that led to the problem. In Boston, for example, the MBTA has been in bankruptcy since World War I and was brought to bankruptcy by regulation to maintain the nickel fare in the face of rising costs. In part the utility holding company act, which got the electric utilities out of the transit business, played a tremendous role in eliminating a major source of cross subsidi- zation for transit in later years. The highway program and a variety of other public programs in housing and continuing regulatory problems during the early postwar years contributed to a demise in transit. So it became natural that, when the transit crisis became sufficiently severe, government should try to solve the problem. Third, government is much less ruthless than the marketplace. Government cannot bear to alienate powerful interest groups because votes are needed and also because governing inevitably forces choices among groups and perceives failures in doing so. That is, there are always a variety of choices among competing claims for resources. The result is that politicians always see their political support eroding over time, so there is an intense competition to try to make as few enemies as possible. A politician faced with a crisis or a constituent demand will try to disturb the overall policy framework as little as possible as he or she responds to that crisis or demand. In other words, the politician will try to adjust the system incrementally to accommodate the demand or to solve the immediate problem because to remake the whole system would arouse and bring into direct conflict with one another a tremendous variety of groups that are the constituencies of all the other policies in the system. Therefore, to avoid gratuitously creating fantastically turbulent conflict all around oneself is to let all the sleeping dogs lie and to try to solve the immediate problem in the narrowest possible way. If we have traffic congestion in the 1950s, let us build some highways to deal with it. If we have a transit crisis in the 1960s and 1970s, let us build some transit systems to deal with that. The idea of trying to remake housing policies, tax policies, or fuel price policies to create a different ecology of micromotives for developers, for travelers, or for people making their industrial and residential location decisions throughout society is a much too difficult problem for the system as it operates. On the other hand, another way of characterizing government is as a lumbering, sentimental, overly ambitious old fool. The government responds to innumerable pleas for help often without asking whether today's response will not generate three more pleas for help tomorrow or whether today's solutions will create tomorrow's problems. People become more and more accustomed to making a plea to government for help when they have problems. Once the barriers are down, each group demands benefits paid by the taxpayers if they require money or sustained by public power if they involve regulatory protection. If the truckers want regulation from new entrance into the trucking industry, they rely on government to provide it to them. If the taxi companies want protection against new taxi companies or jitneys, they rely on government to provide it. Likewise, if the people of Boston or New York are faced with severe transit problems, they turn to the state and to the nation to provide the money. I say this not in a condemnatory way but 61

rather to elucidate the way the system operates. The larger the government role becomes, the less does economic efficiency or economic dynamism seem to be an important consideration. The fact is that social, environmental, and political considerations increasingly predominate in the system. And when one is concerned with the problems of the poor and the handicapped, with preserving the environment, and with getting re-elected, considerations of efficiency mean relatively little. When government operates institutions, it tends to do so with extraordinary inefficiency. When it regulates it tends to protect obsolete ways of organizing activities because these obsolete ways have developed political support—for example, the phe- nomenal resistance to curtailment of rail service for lightly used transit service, the branch-line controversy, the resistance to intermodal integration among truck, barge, and rail lines, the resistance to pooled taxi service in many areas, and the resistance to the evolution of taxi systems into demand-responsive systems. How does it end up when there is public operation over a period of time? One critical element is that labor power grows to an extraordinary degree not only because a set of laborers can paralyze the local economy but also because government is oriented toward the votes of the employees who are on the other side of the bargaining table. A former colleague of mine wrote a paper in which he called the public service labor unions the new political machines, pointing out that, with the decline of the old machines, politicians were looking for organizations that care intensely about state and local politics and that can deliver a substantial number of votes. The people who care most about public affairs are, of course, the people who earn their living in public affairs; and, since they have been mobilized into powerful labor unions in recent decades, they have become the most important organizations in state and local elections. Often the people who do the bargaining, although they are not directly affected by the settlements that they make, have come out of the labor unions that they are now bargaining with and can expect a percentage increase from management identical to whatever they negotiate for labor. In the Boston area, for example, the normal pattern for the MBTA system during the last dozen years has been for top management to be allied with organized labor against the board of directors and the governor in trying to hold down the tax cost. The board of directors and the governor never pursued it too far because of their need for public support of organized labor and indeed for top management as well. The pressure to hold down fares is overwhelming. Last year when there was a 35 percent increase in gasoline prices across the country, a 12 percent increase in con- sumer prices, and roughly a 20 percent increase in wholesale prices, transit fares nationally declined by 1 percent, primarily as a result of large fare-reduction programs in 2 cities and off-peak fare reductions in other cities. Transit authorities, created to bring some sense out of the chaos of dying, competing transit companies and to provide the strength to build grand fixed guideway systems, feel that any competition is a threat to them. Therefore, they move as quickly as they can to buy up all the private operators and are never oriented toward recreating some private initiative in the transit field by spurring either van pools or jitney systems. Their business is operating conventional transit and getting rid of private sectors. The drive is toward monopoly, grand construction, and satisfying local constituencies with money drawn from elsewhere. What could be more ideal for a local official than to come up with a grand monument from a transit project for which the federal government paid 80 percent and the state paid another 10 percent? There is an increasing drive to get state and national governments to pay for labor and low fares as well. In a democratic system, can the most important public needs and constituent demands be satisfied in ways that are less harmful to the entrepreneurial figure, private initiative, and to a free enterprise system, in short, the economic efficiency of the system? I think it is important to keep in mind that our forebears centuries ago were comprehensive planners of sorts, different from those who are in regional planning commissions around the country, but comprehensive planners nonetheless. They did not pursue as many values as we try to in government, but they did seek a system that might combine democracy, liberty, and economic dynamism. They thought those were ambitious values to try to maximize in the same system, and the virtue of capitalism, 62 as they saw it, was that it permitted decisions to be made quickly, to be made without a lot of red tape or political pressure, and to be made outside the political arena. By deliberately limiting the scope of government, they sought to confine the inherent tendencies of government toward inefficiency, economic irrationality, and autocracy. They knew that, by getting government to worry about all these values and to try to solve every problem, an enormous amount of power would inevitably be concentrated in government. Thus, the price paid would be not only in terms of inefficiency but also in terms potentially of the decline of democracy and liberty, which were the other key values they were concerned about. Our approach now is quite different. In modern America, we try to perceive and to retain democracy and liberty and to avoid autocracy through comprehensive planning, participatory democracy, and what I have come to call consensual federalism, that is, the federalism in which everybody has to agree before anything can be done. We have piled qualifier upon qualifier on the commission definitions of agencies, particularly those that have development mandates. If one considers that numerous qualifiers with respect to the nature of comprehensive planning, environmental protection, and eminent domain proceedings have been placed on the development mission of an agency like the Federal Highway Administration or the Urban Mass Transportation Administration and that any member of the public has been given the right to sue if he or she feels that any one of those qualifiers has not been adequately respected, then one should not be surprised when the courts decide against proposal alter proposal because nobody has really said that the development mission ought to outweigh the other missions. This does tend to confine autocracy, but it does not do much for economic dynamism, efficiency, or rationality. All this leads me to a set of themes that I would like to state as brief propositions.

Comprehensiveness and participation tend to be highly conservative forces. Why are they highly conservative? First, they require enormous amounts of time to understand all the implications of many options and to develop something approaching consensus among all the affected groups. They should, in principle, take an infinite amount of time, and only by severely compromising at some point on our lust for comprehensiveness are we ever able to do anything at all. But in any event we are approaching a standard of infinite length of study before making decisions. Second, from a truly comprehensive perspective, there generally seems to be no more reason to do something than not to do it. There are so many arguments pro and con that, from a totally comprehensive point of view, it is not clear whether one ought to get up in the morning. We have a certain internal drive that makes us want to, but that does not mean that it is rational in a way that could be proved with an environmental impact statement. Third, participatory mechanisms tend to oppose any disruption. I am struck by the sense to which participation by economic interest groups means that when government makes decisions it does not threaten any of the economic interest groups by new tech- nologies or by new regulatory mechanisms. If one is concerned about a national energy crisis in a society that will not let any highways be built in urban areas and one thinks about disrupting people's current patterns of living by restraining the availability of gasoline, the more participatory the process is, the less possible it is to consider restraining the availability of gasoline. So, anything that disrupts existing behavioral patterns tends to be resisted by the participatory process. Again, this means not that people should not participate but that for the most part people participate to resist inconvenience and disruption to their lives. Participation and political reform in a nonorganized sort of politics in which parties and traditional political organizations do not play a significant role tend to go with a desire for widespread public participation. Such a system tends to produce public outputs that minimize disruption but that are also costly. In public systems that have such characteristics, there are no small payoffs. There are only big payoffs. Let me give an example. Some political scientists in the last few years compared the cost of government in Chicago and in New York City. They found that service-for- 63 service New York City fairly consistently costs about twice as much as Chicago to run. The reason for this appears to be that Chicago is a system in which authority is concentrated by a lot of little payoffs. I mean this not in an illegal sense, necessarily, but in the sense that people are getting what they want out of the system in a way that or- ganizes enough power for the government to stay in power. In New York City, by contrast, the political parties have essentially withered away and politicians cannot be slated by parties and win elections but must go out and raise millions of dollars to fight primary campaigns, build name familiarity in the media, and then seek to win in a general election. What happens is that the politicians have to go after powerful interest groups that make large claims on government. The result is fantastically generous labor settlements. That is what I mean when I say that there are no small payoffs in a reformed participatory system. To a significant degree the transit system is in this category today in that those who are aiming for the support of the transit constituencies feel that expensive ways of winiling that support are necessary. The resistance to change and the high expenditure patterns build support by spending money instead of by restructuring the system in any substantial way or even allowing it to be restructured by technological developments and by natural economic forces. Con- sider some of the current contradictions in urban transportation policy. You cannot build roads, you cannot restrict energy availability, you cannot take highway lanes out of service on a substantial scale so as to let transit vehicles ride over them, and you cannot deregulate the taxi industry so as to allow it to perform transit functions more effectively. The only thing that is possible to do in the system is to spend lots of money. In Atlanta a few months ago, someone asked me what I thought of spending a couple of billion dollars for a fixed guideway system in Atlanta, which has a density of population a little more than 3,000 per square mile (the density is about 14,000 per square mile in the central city of Boston, 16,000 per square mile in San Francisco, and 24,000 per square mile in New York). I responded that in looking around I could see a farily low-density metropolitan area and a good highway system but, judging from my Boston experience, I suspected that, if one tried to solve the transit problem in Atlanta by taking some of those highway lanes out of general purpose service and turning them into exclusive bus lanes and by taking some of the streets in downtown Atlanta and creating exclusive bus lanes through them with priority signal systems and if one came up with a system that for maybe $50 million could provide people with at least as fast service and as good downtown distribution, one would probably face a tougher political fight than if one tried to create a $2 billion new system (particularly since the federal government would pay 80 percent of the cost) because motorists would have something taken away that they had gotten used to in those highway lanes. The person who introduced me got up after I finished and said, "The chief planner for MARTA happens to be sitting out there. Could we get a comment on what Mr. Altshuler has just said?" The planner said, "Mr. Altshuler is exactly right." We face some of the same things in Boston. Everybody was terribly agitated about the traffic congestion problem and desperate to decongest the highways; it was feasible to build transit systems. We could not build highways because of the disruption, but we could not possibly imagine managing the highway system we had in ways that would reduce the congestion to a substantial degree. In short, we can spend money, thereby increasing the government role over time, but we cannot engage in efforts that will inconvenience anyone. It seems to me that transit has peaked and that the transit boom has been a product of a set of preoccupations that existed in a given time period. No program that I know of has sustained a growth rate similar to the recent transit program growth rate for more than 5 or 10 years. This has been sustained primarily by the fact that Congress is in a special situation right now and the transit officials were vulnerable because they could not explain why over time voters further and further away from where the benefits are accruing should pay a larger and larger share of the cost and, until some kind of philosophy developed along those lines, were going to continue to be highly vulnerable, particularly since transit costs were rising so fast. But in examining why it has been possible in recent years, one has to recognize that Congress has been freed of a couple of important restraints. It was freed from the 64 balanced budget philosophy in the 1960s that produced a restraint on government spending. It was freed in the 1930s from the idea that government should not meddle too much in economy, and we are now in a period when government is beginning to recognize that acting as though there were no restraints at all—printing money indefinitely, raising all the spenthng programs and cutting taxes at the same time, producing $75 to $100 billion deficits—is an absolute dream if the economists say that it is also responsible when it does that. But if too high an inflationary price is paid and the economy goes to pot, new economic philosophies are going to emerge that place new restraints on government. We tend to underestimate the need for authority in our governmental system even as we overestimate the role that government ought to play. We tend to define both the government system and the planning system in terms of how to check them. That is, our Constitution, our political theories, and all the regulations coming out of Washing- ton on how the planning systems ought to run are all oriented toward who ought to check on whom. This can work in a relatively simple era when a governmental system really has the authority to do some simple things or some things that everybody agrees government has to do. But in an atmosphere of an extremely ambitious approach to comprehensiveness in which people expect government to solve all the problems and blame government for all the misfortunes in life, it cannot work. We have this extremely ambitious approach to comprehensiveness and an atmosphere of participatory democracy, with federalism complicating the issue. So many governments have to agree with one another that it is not surprising that they are led to paralysis most of the time and are unable to act at all. In Boston, when we began the development of the Boston Transportation Planning Review, which in its day was a pioneering effort in participatory urban planning, we said that there was going to be participation. We were going to look at all the modes. We were going to consider all the values, but we were going to have deadlines and we were going to have power in the governor to make decisions at the end of the process. And we did it. At the end of the process the governor said, "This is the way it is going to be," but the trouble was that within the system of consensual federalism that was not good enough. It turned out to be good enough in terms of our state legislature, but in terms of the federal process we had not prepared adequate environmental documents and we had not complied with all the federal requirements that had come out during and after the study. The result is that it is now 21/2 years later and not a single project has gotten beyond the environmental impact statement stage yet, although in late 1972 we thought we had completed environmental impact statements for them in accord with the guidelines available when we began doing the study. We have clearly made progress in recent years from the extreme narrowness of the highway program mentality of the 1960s and the Interstate Commerce Commission perspective on railroad and truck regulation of the 1950s and 1960s, but I sometimes feel that we have traded narrow activism for comprehensive paralysis. We have some fundamental challenges as decision makers. We are not going to go back to Hilton's nirvana of the competitive marketplace resolving and solving all of our transportation problems. We know too much. We are too concerned. The populace is too demanding of control of externalities and of some approach to comprehensiveness. But the populace also wants rapid economic growth, rising services without tax increases, and so on. It wants a thriving, dynamic economy. The problem for transportation officials and indeed for all public officials in today's economy and society is how can we make use of some of the insights of economists like Hilton while also being significantly responsive to larger public policy imperatives that a modern democratic system has to respond to. 65 DISCUSSION Norman H. Emerson, Mayor's Office, City of Los Angeles

Many of the things that Altshuler mentioned are realities in Los Angeles. One of the most important things we are attempting to do in Los Angeles is restructure institutions to respond in a much more positive fashion to transit needs. Issues faced by Mayor Bradley and to a lesser degree by some other political supporters of transit are important. The ways these issues are confronted are greatly influenced by institutional arrangements. Historically transportation in southern California has been a state function; the state division of highways builds the freeways and the Southern California Rapid Transit District, an agency created by the statç legislature without the direct accountability to the voters, operates transit. Therefore, it is difficult to bring about a major change in automobile use and in turn transit use. One of the most important things that Altshuler said concerned the issue of authority versus checks and balances in transit decision making. It is difficult to resist the major public capital improvement program that is inherent in the implementation of a fixed guideway system. Attempts to meet transit needs in an incremental fashion and to examine the public policy implications of those decisions that can support increased transit patronage brought about by automobile management and disincentives and land use controls have not been the priority of major transit authorities. Transit agencies could obviously benefit from traffic management programs, but they do not have the responsibility to implement the restraints or the automobile management program. In southern California we are attempting to centralize the authority of transit decision making with elected officials. Legislation was introduced in the state legislature to separate transit operation from major policy decisions—to allow the transit operator to operate a system and to provide the elected officials with the authority to make major policy decisions, such as allocation of funds and resolution of conflicts among agencies. In addition, this will facilitate decisions by elected officials on the interrelation of transit service and automobile management. The congressional Office of Technology Assessment is evaluating how decisions were made on fixed guideway systems in a number of major urban areas throughout the country. The study is in response to a request from Congress to see how UMTA funds are being spent. In its preliminary report, OTA examines about 10 different areas and identifies many circumstances that the city of Los Angeles or southern California was faced with during our recent debate on rapid transit. The report states, "Although agreement may be reached over the selection of the forum, the designation of participants to act within the forum is also vital to a responsive planning and programming process. In order to satisfy federal requirements, the decision makers must have con- sulted the elected officials." The report mentions that among appointed decision makers priority differences exist, depending on whether the appointment is made by the elected officials or by the governor, and concludes that federal directives have not yet addressed these issues, particularly relating to the authority of the decision maker. In addition, the comment is made that, "while [there are] responsibilities for decision making at each end of the process, there are rivalries over decisions midway, especially over the charged setting of priorities and agency budgets for transit improvements." The importance of the relation of these various decision-making responsibilities is often overlooked during the debate over which agency should ultimately decide on the setting of priorities. The report concludes:

Competition exists over programming and to a lesser degree project design and environmental analysis, and while the decision-making forum for the programming is to be established by the governor and the state legislature and certified by UMTA, this cutting edge authority must be tied to other complementary implementation authorities for effective decision making to occur. These complementary authorities will vary, but in each case the programming responsibility must be associated with equally hard-nosed implementation responsibility, whether it is for land use decisions and development, transit implementation or highway programming and implementation. 66

If Congress attempts to respond to these conclusions, it will begin to take a look at how decisions are made at the local level and the decision process that Altshuler out- lined in terms of how local elected officials can avoid being placed in a situation where the only resolution to a major transit problem is to promise a 260-mile fixed guideway system. The role of the technician and the technologist in the decision-making process is also important. In the early transit debate, the Mayor of Los Angeles made a statement that I think is relevant to decision making and programming:

Technicians are needed to tell us something of what options are available, how these options might work, and roughly what they might cost. But the technicians cannot judge for us the amount of dollars we should spend or exactly how we should spend them, the technological or patronage risk we should take, what our implementation priority should be or how we should balance a competing need, such as community level transit service and regional connecting links or exclusive transit guideways in city streets.

In Los Angeles we are attempting to establish a mechanism and institutional arrange- ment with the corresponding authority to enable local officials to make the appropriate programming decisions and to allow us within the near future to incrementally implement a fixed guideway system program and at the same time to come to grips with low- capital programs interrelated with traffic management programs to bring about a comprehensive transportation program for southern California. Evaluation

Walter L. Revell, Post, Buckley, Schuh and Jernigan, Inc. In reviewing background material for this paper, I was reminded of the diligent effort of the American Management Association to develop and promulgate a management process for business and industry—and all other organized activity in the United States and the world. Recognizing that what you call it does matter, the AMA convened a 3-day conference in Pittsburgh in 1940 for the sole purpose of developing a universally acceptable, useful definition of management. Business school professors and deans and others hammered it out to this conclusion: Management is guiding human and physical resources into dynamic organization units that attain their objectives to the satisfaction of those served and with a high degree of morale and sense of attainment on the part of those rendering the service.

AN INTRODUCTION TO FAILURE

Applying the above definition to the transportation process in this country, even a con- structive but objective critic must readily conclude that our efforts have not been very. successful. If success or progress is measured by any standard—whether return on investment in a capital-intensive industry; safe, efficient, balanced, and integrated systems in a multimodal, interdisciplinary approach; meeting deadlines and budgets; or any other—it must include results. And our failure to complete the National System of Interstate and Defense Highways in 1972 for about $41 billion is just that—a failure— and a critical failure when measured against the few standards we have developed: safety, service, efficiency, mobility. Early completion of major. segments provided these benefits at costs that were considered reasonable even at that time. Completion of the entire system on schedule remained a national objective, and everyone thought it was being accomplished. Now we are told by the Federal Highway Administrator that, at present and proposed rates of spending and cost, it will be 2007 before the system is completed. . . . . . The Interstate Highway program is merely a good example of failure, not the worst. I could discuss TOPICS or, the Lady Bird program that planted marigolds on the medians while bridges fall down or the 1972 Federal-Aid Highway Act. I could also discuss the other modes—rapid transit, buses, airports and airways, ports and waterways, rail-

67 68 roads and bikeways. Most of these facilities are not yet in most of our programs, the systems are advancing as much on motherhood as on technology, and we suddenly must have methods and standards for measuring the need for and the benefits of various modes in a system when we know so little about the individual elements—or about systems. Quite simply, our transportation process or program or system has not been successful because it has not been managed. The basic cause of this failure is human, not technical. It starts with the positions—not the players—on our team and the league in which we play. The major league is for public agencies and public agencies alone. There is another, the minor league, for the private sector. We have two major positions, they are politicians and bureaucrats. Politicians are always at bat, and their success is measured by how long they get to stay at bat. If they are really successful, nobody else gets to bat. Bureaucrats are always in the field, and they catch a lot of things. Their success is measured by good weather and long seasons. They do not like to bat. And if that sounds facetious and unbecoming to a conference of the Transportation Research Board, I agree with that appraisal. But the situation is more real than imag- med and totally out of place if we are to have a modern, comprehensive, systematic transportation program that results in an efficient, economical, and effective network for the movement of people and goods throughout this country. With growth, urbanization, and many external factors, we have experienced inflation, cost escalation, and materials shortages. The construction cost index doubled in 7 years. Then the pendulum swung, and the environmental movement gave birth to the National Environmental Policy Act and related laws, rules, regulations. More than anything else, it changed the hallowed custom of the legal profession in which attorneys traditionally recommended that their clients try to resolve their concerns out of court. And the transit movement was no less vigorous, no less political, differing from the traditional helter-skelter, hodge-podge approach to transportation only in the size of the spotlight and the fervor for goring someone else's ox.

AN ADVENTURE IN BASICS in evaluating the transportation programming process, we traditionally refer to a linear alignment of functions—from planning to programming to engineering to right-of-way acquisition to construction— and to factors of time, funds, and manpower, generally for individual projects and possibly grouped. We try to measure how things are going in terms of efficiency, economics, or effectiveness and to obtain results in quantity or sometimes in quality. But the question, How are we doing? is vague and the question, Did we do what we said we would do? is not much better, certainly not today, after our experience with hits and misses. There are a few managers—even a few politicians and bureaucrats—who have come to realize that there is a missing, untried step: resource allocation. Yet, resource allocation is only another fragmented element in the transportation planning and development process because it is not a practiced discipline in the total realm of public taxation and finance, and the private sector remains on the outside of the critical decision-making structure, if any. The focus of the conference should have been on the vertical structure of government (federal, state, regional, local), the relation between the legislative and the executive branches of government at each level, the interdependence of all these levels and units, and the horizontal relation of sister agencies at each level. The evaluation of program success must seriously consider the role of transportation in meeting the needs and the desires of society, the role of each level and unit of government, the role of private enterprise in establishing and accomplishing reasonable objectives, the balance of resources among all functions of publicly funded programs, and the performance of individual agencies and units in their assigned roles with available resources. 69

Are we doing what we should be doing? is the first question that we must answer, recognizing that we are in a going business. And the answers must come from the Congress of the United States and the legislatures of the 50 states and in reports and recommendations by the President and the 50 governors based on completed staff work by the U.S. Department of Transportation and the state departments of transportation and related state agencies.

DISCUSSION

Lester P. Lamm, Federal Highway Administration

I would like to give the background of what, within title 23 of the Federal-Aid Highway Act, .currently constitutes a programming requirement. Programming has been a part of title 23 since the first Federal-Aid Highway Act of 1916. Congress obviously indicated its idea that individual highway projects should be more than just individual highway projects. They should be tied together within some general fiscal controls. They should be related to attain an impact as a program that will be greater than its individual projects. Programming should really be a tie between the systemwide planning activities and the individual project development, but it has not worked out that way for several reasons. One reason is that emphasis on the Interstate Highway System disrupted all other priorities that the states had in effect at that time. The federal funding began to be much more heavily concentrated in the Interstate System. The emphasis to complete the Interstate System by 1972 should have been at the state level. At the time of enactment of the Federal-Aid Highway Act of 1956, a fiscal plan was proposed to permit completion of the system by 1972. Failure to complete the system on schedule came about as a result of a number of influences, some of which related to systemwide planning. Others related to how the elements of the Interstate System tie together. There was pressure to increase the mileage of the Interstate System. Within the approved Interstate System there were many failures in terms of the development of individual projects. As a result, the programming process that the states had historically carried out before 1956 began to be less and less desirable. Title 23 calls for an annual program of projects. The process is supposed to be that Congress authorizes funds for a given year, and then the funds are apportioned to the states on the basis of the legislative formula. The states know in advance of the year how many dollars they are going to have for highway projects on various systems. They know this in time to get matching funds from state legislatures. The programming function is intended to tie internal priorities of an individual state into a listing of projects. However, overconcentration on completion of the Interstate System by the 1972 deadline caused states to warp priorities when funds became short. Another warp was introduced into the programming process beginning in 1967, when for the first time there was a shortfall between the amount of funds authorized to the states and the amounts that they could actually put to work within the course of the fiscal year. Each of these outside factors made the programming function within the highway program potentially more difficult to perform. Some of the recent program directives of the U.S. Department of Transportation deal with areawide programming within urbanized areas. Another companion regulation deals with the annual process of programming highway projects at the state level. We are trying to do two things. We are calling for orderly annual programming. We are trying to restore the short-range planning function to the concept of programming. And we are trying to divorce the program function from the detailed fiscal accounting process that has grown up during the years. It has been necessary in the period of reduced program levels to make certain that 70 state dollars are tied to specific projects at the earliest possible time. Policy and Procedure Memorandum 21-1, which is our basic directive for the carrying out of a state-level highway program, dates back to 1958. It has been modified 12 or 13 times in the intervening period; each modification has concentrated more heavily on the detailed financial aspects, the accounting principles, and the tie between the dollars and projects than on the overall function of programming. We have been working on a complete revamping of the highway programming directive since 1965. We are committed to an effort to try to restore the function of programming to its rightful place. A lot of the criticisms of the process reflect the fact that there is no real tie between the areawide planning process, whether it be urbanized area or statewide, and the individual projects. We are trying to restore that tie. Should the program itself ever be evaluated? We can recall that the areawide planning process has a requirement for evaluation and that, at least from the Federal High- way Administration's point of view, we are evaluating the planning process. We are not evaluating the product. We do not approve areawide plans, but we do go into the process to see how it is working and make certain that it is carrying out the intent of the federal legislation. Individual projects receive by far the heaviest evaluation of any aspect of the transportation system, primarily through the development of environmental impact statements. Do we want to go back and evaluate program development? It would probably be easy to set up an evaluation process. We could put it in cost-effectiveness terms. We could tie it to the fiscal dollars very effectively, and as I try to visualize what we would have as a result, I am stuck with the term PPBS. That concept was fine, but the process became unworkable. I am afraid that a relatively formal and extensive evaluation process of the transportation program may yield the same results. From my point of view, it might be preferable to view program development as a necessary link and not become worried unless that link is not there. Unless the local and the state governments fail to develop a program, we have no problem. We do not, and cannot by statute, send the state back to redo the priority ranking. We are not authorized by Congress to put a Washington influence on the selection of individual projects within an urbanized area or within a state. To summarize briefly, from the viewpoint of the Federal Highway Administration, the programming process is necessary. It has been neglected, and we are committed to restoring it with a minimum requirement of federal presence in an evaluation process.

DISCUSSION

C. Kenneth Orski, Urban Mass Transportation Administration

Many discussions during the conference were filled with words like "failure," "lack of performance," and "lack of success." Many participants apparently felt that transportation, public transportation anyway, had not achieved the kind of success that had been expected of it. I am not sure that I fully agree with that pessimistic assessment. Al- though there is room for improvement, there is also some cause for congratulating ourselves or at least for not feeling overly pessimistic. I will comment on Revell's remarks by taking up his 2 principal points. First of all, he said that the transportation profession has had a morale problem. I am not sure that our profession really has a greater number of unhappy or dissatisfied people than other professions. Compared to other federal programs, like space or atomic energy or some of the other public sectors, the transportation program is actually doing quite well. For the first time people are beginning to find a certain sense of satisfaction and accomplishment. I would certainly not characterize our profession as demoralized. He also mentioned performance or results or output and felt that in some way we have not measured up to some predetermined standard of success. My problem with 71 this is that I do not really know what kind of measures of performance the transportation program is being judged against. Is it return on investment? Is it profitability? Are these measures of success? Certainly back in the nineteenth century, perhaps even in the early twenteeth century, profitability was a measure of accomplishment. Transportation in those days was considered as basically private enterprise that was supposed to produce profit for its in- vestors, and any transportation venture that did not meet this test was judged to be a failure. Today we have a somewhat different outlook on transportation. We tend to view it more as a public service than as a private venture; therefore, the index of profitability, of return on investment, has become a much less meaningful measure of performance than it used to be. If it is not profitability, what then is the measure for our success? In UMTA we are still struggling with that question. We have, of course, certain statutory objectives against which to measure progress, and we have certain national objectives of air quality and energy conservation. But these are not operational objectives, and they are not objectives that transit or transportation alone has the power to achieve. My own private targets for accomplishment would be three. First, we should be trying to improve the quality of service for what Pikarsky has called the "transit independents," that is, those people who are not obliged to use public transportation. Second, we should be trying to improve the mobility of the transit dependents, those people who, for one reason or another, are forced to use public transportation. And third, and this is probably a more subjective kind of standard, we should be trying to reduce automobile usage because automobile usage, in some ways, serves as a surro- gate for certain more basic goals, such as improved environmental quality and energy conservation. The transportation profession has done quite well in terms of the first objective. We have improved the quality of service for the independents rather spectacularly. Both the automobile-highway system and the aviation system have performed surprisingly well. The fact that I was able to leave Washington and arrive at the conference in Orlando within 3 hours and to go to Disney World one evening without too much problem testifies to the fact that the transportation system does work rather well. Of course, it does break down on occasion, and it can be improved; but on the whole the Interstate Highway System, the commercial aviation system, and the automobile have served us well. We can be justifiably proud of having accomplished all this in a relatively short period of time. We have not done as well in terms of the other 2 measures of success. We have not sufficiently improved the mobility of the transit dependents, and we have made hardly any dent in reducing automobile usage. But I would plead here for some patience. One reason why we feel dissatisfied, why we have this feeling of failure and of lack of performance, is that we are an impatient people and we are trying to accomplish in a short period of time things that in other countries took literally whole generations. The field of transit is a good example of what I mean. In most countries of the world, transit systems have been built during several generations. The London and Paris subway systems, for example, were begun in the early 1900s, and they are still being expanded. They are still not quite finished. The same thing is true of New York's subway system, which was begun in 1900 and was not completed until the late 1930s. It took some 40 years before New York really obtained its rapid transit system. What some cities are trying to do these days is to compress this process into a much shorter time frame. Washington and Atlanta are trying to build rapid transit systems on a much more accelerated schedule. For example, Washington is trying to complete a 98-mile system within a decade. Understandably politicians desire to see things done within their political lifetimes, and even transportation professionals like to see things done while they are still active. But from a detached, historical perspective, these are hardly reasonable objectives. These major public works programs simply cannot be compressed into short time scales. I would plead for a greater degree of tolerance and a greater understanding of what we are up against. 72

The transit program is not the Manhattan Project or the Apollo Program in which money was of no consequence and things had to be done by a certain deadline. This is a program that, important though it may be, does have to compete for funding with other national programs such as education, housing, health, and defense. The money available for transportation development is not unlimited, and therefore we must not expect the impossible. Having said this, I want to stress that I do recognize a lot of validity to what both Revell and Hilton say. I am particularly conscious of their criticism that transportation is not being managed well enough. I think we can all agree on that. Both the transit system and the highway system can and should be managed in a more effective way. But to go on from there to an admission of failure is, I think, a long and unjustified step. Participants and Sponsoring Committee

PARTICI PANTS Robert J. Aaronson, Maryland Department of Transportation, Baltimore Alan A. Altshuler, Massachusetts Institute of Technology, Cambridge

George J. Bean, Tampa International Airport Anthony J. Blackburn, Urban Systems Research and Engineering, Inc., Cambridge, Massachusetts Stephen E. Blake, Transportation Research Board, Washington, D.C. Malcolm F. Brenan, West Virginia Department of Highways, Charleston George A. Brown Ill, Metropolitan Planning Commission, Savannah, Georgia Joseph W. Burdell, Jr., Federal Highway Administration, Baltimore, Maryland Donald R. Byard, Oregon Department of Transportation, Salem

Bruce Campbell, Fay, Spofford and Thorndike, Boston James B. Chiles, Pennsylvania Department of Transportation, Harrisburg Vincent Ciletti, Federal Highway Administration, Washington, D.C. Mel A. Conner, Florida Department of Transportation, Tallahassee Kenneth E. Cook, Transportation Research Board, Washington, D.C. Ivano E. Corvi, Federal Highway Administration, Washington, D.C.

Aubrey Davis, Jr., Municipality of Metropolitan Seattle Dan C. Dees, illinois Department of Transportation, Springfield John H. DeWinkler, Florida Department of Transportation, Tallahassee John A. Dufficy, Federal Aviation Administration, Fort Worth

Norman H. Emerson, Mayor's Office, Los Angeles Rodney E. Engelen, Barton-Aschman Associates, Inc., Evanston, Illinois Robert D. Ericson, U.S. Department of Transportation, Washington D.C.

Arthur J. Fallon, Niagara Frontier Transportation Authority, Buffalo Stephan P. Fregger, Florida Department of Transportation, Tallahassee

73 74

Walter F. Frey, Texas Highway Department, Austin Robert H. Friis, Denver Regional Council of Governments

Jerold A. Glick, Maryland Department of Transportation, Baltimore Frederick J. Gottemoeller, Maryland Department of Transportation, Baltimore James 0. Granum, Highway Users Federation for Safety and Mobility, Washington, D.C. John T. Gray, Vermont Department of Highways, Montpelier

Harvey 0. Haack, Illinois Department of Transportation, Springfield Lonnie E. Haefner, Washington University, St. Louis J. Robert Harbison, Kentucky Department of Transportation, Frankfort F. Norman Hill, San Antonio Transit System William M. Hilliard, Florida Department of Transportation, Tallahassee George W. Hilton, University of California, Los Angeles Harry R. Hughes, Maryland Department of Transportation, Baltimore Thomas F. Humphrey, Massachusetts Department of Public Works, Boston

Paul E. Irick, Transportation Research Board, Washington, D.C.

Raymond L. Kassel, Iowa State Highway Commission, Ames L. A. Kimball, Maryland Department of Transportation, Baltimore

Lester P. Lamm, Federal Highway Administration, Washington, D.C. Ray G. L'Amoreaux, Florida Department of Transportation, Tallahassee Ron Luczak, Chicago Transit Authority Theodore C. Lutz, U.S. Department of Transportation, Washington, D.C.

Daniel R. Mandelker, Washington University School of Law, St. Louis Vincent A. Mattson, Washington Department of Highways, Olympia JoAnne McGowan, Federal Railroad Administration, Washington, D.C. William L. Mertz, Federal Highway Administration, Washington, D.C. Thomas P. Messier, Federal Aviation Administration, Washington, D.C. Louis N. Million, Federal Aviation Administration, Des Plaines, illinois Charles H. Moorefield, South Carolina State Highway Department, Columbia Richard D. Morgan, Federal Highway Administration, Washington, D.C. Harry T. Morley, Jr., St. Louis Regional Commerce and Growth Association

James R. Nelson, Amherst College, Massachusetts Robert W. Nelson, Metropolitan Atlanta Rapid Transit Authority, Atlanta

C. Kenneth Orski, Urban Mass Transportation Administration, Washington, D.C.

Henry L. Peyrebrune, New York State Department of Transportation, Albany Milton Pikarsky, Chicago Regional Transit Authority William J. Pitstick, North Central Texas Council of Governments, Arlington William E. Popp, Puget Sound Council of Governments, Seattle

Sam W. P. Rea, Jr., Urban Mass Transportation Administration, Washington, D.C. Walter L. Revell, Post, Buckley, Schuh, and Jernigan, Inc., Miami John J. Roark, North Central Texas Council of Governments, Arlington Sydney R. Robertson, Maryland Department of Transportation, Baltimore Keith Rosser, New Jersey Department of Transportation, Trenton

Charles C. Schimpeler, Schimpeler-Corradino Associates, Louisville Madeleine G. Schneider, Urban Mass Transportation Administration, Washington, D.C. Frederick A. Schoenfeld, illinois Transportation Study Commission, Springfield Gordon B. Sharpe, American Association of State Highway and Transportation Officials, Washington, D.C. 75

Larry Snowhite, State of New Jersey Washington Office, D.C. Robert E. Spicher, Transportation Research Board, Washington, D.C. John L. Staha, Governor's Office, Austin Robert C. Stuart, Virginia Polytechnic Institute and State University, Blacksburg Carl N. Swerdloff, U.S. Department of Transportation, Washington, D.C.

Gene R. Tyndall, U.S. Department of Transportation, Washington, D.C.

Tom Webb, Jr., Florida Department of Transportation, Tallahassee Lawrence Wieman, California Department of Transportation, Sacramento Germaine G. Williams, Federal Aviation Administration, Washington, D.C. Martin Wohi, Carnegie-Mellon University, Pittsburgh Guy R. Wood, illinois Department of Transportation, Springfield Joel Woodhull, Southern California Rapid Transit District, Los Angeles

SPONSORING COMMITTEE

GROUP 1—TRANSPORTATION SYSTEMS PLANNING AND ADMINISTRATION Wilson Campbell, New York State Department of Transportation, chairman

Steering Committee for a Conference on the Transportation Programming Process Bruce Campbell, chairman; Aubrey Davis, Dan C. Dees, Arthur Fallon, Lonnie E. Haefner, Ray G. L'Amoreaux, Henry L. Peyrebrune, John J. Roark, Charles C. Schimpeler, Larry S. Snowhite, Robert C. Stuart, D. L. Wieman, and Martin Wohi, members

William L. Mertz, Thomas Messier, Richard D. Morgan, C. Kenneth Orski, Jerome C. Premo, and Gene Tyndall, liaison members

Kenneth E. Cook and Stephen E. Blake, Transportation Research Board staff The Transportation Research Board is an agency of The National Academy of Scienóes was,established the National Research Council, which serves the by a congressional act of incorporation signed by National Academy of Sciences and the National President Abraham Lincoln on March 31 1863, to fur- Academy of Engineering. The Board's purpose is to ther science'and its use for the general welfare by stimulate research concerning the nature and perfor- bringing together the most qualified individuals to deal mance of transportation systems, to disseminate in- with scientific and technological problems of broad formation that the research produces, and to encour- significance. It is a private, honorary organization of age the application of appropriate research findings. more than 1,000 scientists elected on the basis of out- The Board's program is carried out by more than 150 standing contributions to knowledge and is supported committees and task forces composed of more than by private and public funds. Under the terms of its 1,800 administrators, engineers, social scientists, and congressional charter, the Academy is called upon to educators 'who serve without compensation. The pro- act as an official—yet independent—advisor to the gram is supported by state transportation and highway federal 'government in any matter of science and tech- departments, the U.S. Department of Transportation, nology, although it is not a government agency and its and other organizations interested in the development activities are not limited to those on behalf of the of transportation. government.

The Transportation Research Board operates within To share in the task of furthering science and en- the Commission on Sociotechnical Systems of the Na- gineering and of advising the federal government, the tional Research Council. The Council was organized in National Academy of Engineering was established on 1,916 at the request of President Woodiow Wilson as an December 5, 1964, under the authority of the act of agency of the National Academy of Sciences to enable incorporation of the National Academy of Sciences. Its the broad community of scientists and engineers to as- advisory activities are closely coordinated with those sociate their efforts with those of the Academy mem- of the National, Academy of Sciences, but it is inde- bership. Members of the Council are appointed by the pendent and autonomous in its organization and elec- president of the Academy and are than from 'aca- tion of members. demic, industrial, and governmental organizations throughout the United States.